Potential Development of United States Oil Shale Resources

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INTEK
Potential Development of United States Oil Shale
Resources
March 28, 2007
Khosrow Biglarbigi INTEK, INC.
Presented at the 2007 EIA Energy Outlook
Conference, Washington, D.C.
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Key Discussion Items

• Importance of shale oil
• Size and quality of resource
• State of the technology
• Economics
• Environmental challenges
• Land use
• Air quality
• Water quality
• Path forward

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World Oil Supply and Demand
Growing World Demand

• Demand Growth of 15MMBbl/D (by 2025)
• OPEC Excess Capacity of 1 MMBbl/D (in 2005)
• Where Would the Balance Come From?

Diminishing OPEC Excess Capacity
Million Bbl/D
Source Energy Information Administration (AEO
2006)
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Reason for Concern at HomeEver Rising Oil
Refined Products Imports
U.S. Consumption
Imports
U.S. Production
Includes crude, NGLs, and refinery gains
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The Opportunity Most Concentrated Hydrocarbon
Deposits on Earth

• Over 6 trillion barrels of resource nationwide
• Nearly 2 trillion barrels in rich deposits in
  Western states
• Colorado, Utah, and Wyoming

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Western Oil Shale Ownership(80 on Federal Lands)
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Oil Shale Conversion Technology
Surface Process
Premium Refinery Feed
Oil Upgrading
Resource
Ore Mining
Retorting
In-Situ Process
Premium Refinery Feed
Oil Upgrading
Resource
In-Situ Conversion
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Key Present Activities

• Department of the Interior (DOI)
• RDD leasing program
• Commercial leasing program
• Industry activities
• Unconventional Fuels Task Force
• EPACT 2005
• Section 369

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Leasing Program

• DOI awarded five (5) RDD leases in 2006
• Shell Frontier
• Chevron U.S.A.
• EGL Resources
• A sixth lease is being finalized for award (OSEC
  LLC)
• Lease size and duration
• Initially, 160 acres (per)
• Option to expand to 5,120 acres (if technology is
  successful)
• The RDD phase is for ten (10) years
• Development of commercial leasing program
  underway
• PEIS to be released by late summer

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Location of Oil Shale RD Leases
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Example In-Situ Conversion Technology

• Developed by Shell Petroleum
• Currently in pilot phase in north-western
  Colorado
• Shell to apply technology at three other sites in
  Colorado

Shells ICP Process
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Other Examples of In-Situ Conversion Technology

• Pilot tests under development in Colorado

EGL Resources Process
Chevron Process
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Example Surface Retort Technology

• Initially designed for extracting bitumen from
  tar sands
• Selected for oil shale conversion in Australia
  (SPP)
• OSEC to apply ATP for its RDD efforts in Utah

Alberta Taciuk Processor (ATP)
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Other Surface Retort Technology

• Originally developed by
• Cameron Engineering
• Bureau of Mines
• Most successful
• High thermal efficiency
• High retort efficiency
• Variations of GCR
• Petro-six operating in Brazil
• Paraho Process being tested for a major project
  abroad

Gas Combustion Retort
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Companies Planning Activities

• American Oil Production LLC
• Anadarko Petroleum Corp.
• Argyll Energy LLC
• Carbon Recovery Corp.
• Chattanooga Corp.
• Electro-Petroleum Inc.
• Exxon Mobil Corp.
• Great Western Energy LLC
• Imperial Petroleum Recovery Corp.
• Independent Energy Partners Inc.
• Kennecott Exploration Company
• Mountain West Energy Inc.
• Nevtah Capital Management Inc.
• Natural Soda Inc.

• Oil Tech Inc.
• Petro Probe Inc.
• Phoenix Wyoming Inc.
• Syntec Energy LLC
• Temple Mountain Energy Inc.
• Western Energy Partners LLC
• Red Leaf
• Purple Mountain Ventures
• Raytheon
• Board Energy LLC
• Earth Search Sciences
• Reynolds Raw Materials
• Wright Talisman

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The Unconventional Fuels Task Force

• Federal agencies
• Department of Energy
• Department of Defense
• Department of the Interior
• Participating states
• Colorado
• Kentucky
• Mississippi
• Utah
• Wyoming

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The Energy Policy Act Directed The
StrategicUnconventional Fuels Task Force to

• Develop a program to coordinate and accelerate
  the commercial development of strategic
  unconventional fuels
• Make recommendations for promoting unconventional
  fuels development
• Recommend whether and how America should
• Partner with Alberta on development of U.S. tar
  sands, and
• Partner with nations with significant oil shale
  resources
• Task force findings and reports coming soon

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Oil Shale Economics

• Cost as a function of technology and resource
  quality
• Expected to decrease with experience and lessons
  learned
• Canadian oil sands a good example

First Generation Projects
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Projected Production Potential (BOE)(Shale Oil
in the U.S.)
RDD
Tax Incentives
Base
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Example Benefits of Oil Shale DevelopmentCumulati
ve (Over 25 Years)
1 Federal Revenues are the sum of Federal
Business Taxes plus Royalty payments 2 State
Revenues are the sum of State Business Taxes,
production taxes, plus the state portion of
Federal Royalty payments 3 Public Sector
Revenues are the sum of Direct Federal and Direct
State Revenues
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Projected Potential Employment
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A New Model Developed by NPOSR
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Oil Shale Environmental Challenges

• Land Use
• Disturbance depends on process
• 31 square miles per 1 MM Bbl/d capacity (surface)
• 21 square miles per 1.5 MM Bbl/d capacity
  (in-situ)
• Less than 0.5 for a 2.5 MM Bbl/d industry
• For 40 years
• Air Quality
• Heating shale can generate gases including SO2,
  NOx, CO2, particulates, and water vapor
• Technology exists to control / reduce emissions
• And to sequester

Green River Formation 17,000 Sq. mi.
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Environmental Challenges

• Water Impacts
• Estimates range from 1-3 barrels of water per
  barrel of shale oil
• Colorado river systems flow 10-22 million acre
  feet/yr
• 2.5 MM Bbl/d oil shale industry
• Requires 0.2-0.4 million acre feet/yr
• Challenge
• Water runoffs (surface)
• Ground water protection (in-situ)

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Summary

• Over 2 trillion barrels of in place resource
• The most concentrated hydrocarbon deposits on
  Earth
• Conversion technologies are advancing rapidly
• A unique opportunity to provide long term
  sustained production of up to 2.5 MMBbl/Day
• Substantial economic benefits to the Nation
• Requires concerted effort by the private sector,
  Federal State governments, and local communities

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Acknowledgements

• U.S. Department of Energy
• Office of Naval Petroleum Oil Shale
  Reserves
• Office of Petroleum Reserves
• Task Force for Unconventional Fuels
• Department of Energy
• Department of Defense
• Department of the Interior
• State of Colorado
• State of Kentucky
• State of Mississippi
• State of Utah
• State of Wyoming