With an estimated 2 trillion barrels of shale oil under US soil -- roughly 60 % of the world's known deposits -- successful development would, at least on paper, begin to change the international oil business. The US would become the world's single biggest oil source, far surpassing Saudi Arabia's proven reserves of 261 billion barrels. More than half of it is in the Green River formation of Eastern Utah, northwestern Colorado and southwestern Wyoming. The new energy bill will most likely contain incentives of some sort for developing this resource.
Oil Tech Inc., based in Utah, believes that it has perfected an extraction process to the point that it can produce oil for as little as $10 a barrel. Their process takes oil shale rock mined from the ground, crushes and pulverizes it, dries it, puts it through a five stages of retort (in this case pyrolysis, heating in a closed container without the presence of oxygen), and condenses the resulting gases, forming shale oil or syncrude (synthetic crude oil). Syncrude contains 10% naphtha, 40% kerosene, 40% diesel fuel, and a 10% nitrogen rich residual. In addition to the oil products the process captures valuable by products. Oil Tech says the technology is ready to commercialize, license, joint venture or acquire.
Shell Exploration and Production is experimenting with a new technology that the company estimates could produce oil for $25 to $30 per barrel. The Shell process involves drilling a well 2,000 feet deep and then heating the surrounding rock to between 600 and 700 degrees for two years. The heat allows the oil and gas to flow to the surface. A thick ring of ice is formed around the well which keeps contaminants from polluting groundwater. The heating and freezing is energy-intensive, but Shell says they still produce three times as much energy as they use in the process. It will take another five years of research and testing before Shell decides whether the technology can be applied commercially.
Of course Saudi's proven reserves are money in the bank and our shale oil reserves are still pie in the sky. At least there is some optimism that we are making some progress in developing this huge reserve. The Oil Tech process has many potential environmental problems associated with the mining of the shale rock. I presume their cost of $10 a barrel does not include any of the mining costs. Shell's estimated costs are still in the acceptable range when competing with $50 crude, and I assume their cost includes all expenses.