Shale Oil... For 17 bucks a barrel?

[SirNitram]

Link

HAIFA, Israel, Nov. 7 (UPI) -- The Israeli process for producing energy from oil shale will cut its oil imports by one-third, and will serve as a guide for other countries with oil shale deposits, according to one company.

A.F.S.K. Hom Tov presented its oil shale processing method on Tuesday, outside Haifa and just down the street from one of the country's two oil refinery facilities.

"Because the patents for this process belong to (the company), Israel is the most advanced in the world in the effort to create energy from oil shale," Moshe Shahal, a Hom Tov legal representative and a former Israeli energy minister, told United Press International.

Shahal estimated that the company's Negev Desert facility would begin full-scale production in three to four years, while other countries with oil shale deposits will need five to six years to reach production.

Oil shale is limestone rock that contains hydrocarbons, or fossil fuels -- about 20 percent of the amount of energy found in coal. Using the rock as a raw material and coating it with bitumen, a residue of the crude oil refining process, the company can produce natural gas, fuel, electricity, or a combination of the three.

Older technologies squeezed the hydrocarbon material out of the rock, with extremely high pressure and at high temperatures.

According to Professor Ze'ev Aizenshtat, an oil shale expert, the Hom Tov process is more environmentally friendly than other methods of converting oil shale into energy. It also allows for more flexibility in the kind of fuel produced, produces less waste and operates at lower temperatures than other methods.

Though the production process may be more environmentally friendly, the end product is still a fossil fuel, similar in quality to a high-grade diesel when in liquid form.

Israel's shale is low-quality, however -- its "caloric value" is only about 15 percent, while shale in other countries yields 20 percent, according to a report in BusinessWeek earlier this year. As a result, more Israeli shale is needed to produce the same amount of fuel.

Hom Tov isn't worried, however. "This is a much lighter (substance) than what gradually comes out of an oil field," Aizenshtat told UPI, as Hom Tov company owners Israel Feldman and Shimon Kazansky posed for photographs with their fingers dipped in a plastic pitcher of the stuff.

Because fewer refining processes are necessary with oil shale than with crude oil, the final product is a higher quality fuel at a lower price, Aizenshtat said.

The company estimates it will consume 6 million tons of oil shale and 2 million tons of refinery waste each year, for an annual production of 3 million tons of product.

It would cost about $17 to produce a barrel of synthetic oil at the Hom Tov facility, meaning giant profit margins in a world of $45 to $60 per barrel crude. Yearly earnings are forecasted to be between $159 million and $350 million, Shahal said.

Israel has 15 billion tons of oil shale reserves. Jordan, on the other hand, has about 25 billion tons, and the oil shale in Jordan is of higher quality. Shahal met with Jordanian Energy Minister Azmi Khreisat earlier this year, to discuss setting up a plant there.

The United States also has a giant reserve, mostly in Colorado, and Hom Tov sees potential for its patented process there.

The process, which Feldman and Kazansky developed in the mid-1990s, has lately attracted some high-powered investors, including Ofer Glazer -- the third husband of Israel's richest resident, billionaire Carnival Cruise heiress Shari Arison.

"It's a kind of dream" to invest in Hom Tov, Glazer told UPI. "It's the type of investment where Israel needs the product, and it creates jobs."

Glazer added that it will be good for Israel not to be dependent on "external sources" for its energy needs, saying that "those countries aren't exactly friendly (to Israel.)"

As for his stake in the project, Glazer said he preferred "not to get into numbers."

That sound you hear is oil's price passing 55 bucks a barrel and starting to accelerate at the very concept.

[Spin Echo]

Considering the US has the world's largest shale oil deposits, something to the tune of 3 trillion tonnes, this is good in terms of its reliance on foreign oil, but bad in terms of global climate change.

How's the environmental impact of shale oil processing compared to coal liquification? IIRC, it's better than coal, but I haven't found any reliable sources to back me up on that one.

[J]

Let's hope it works, however given the past history of oil shale extraction schemes I'm not terribly optimistic. Also by my rough calculations, the entire yearly proposed production for Israel would cover about one day of US oil consumption. Promising, but a long way to go, and somehow I think the environmentalists would not be happy with a few hundred square miles of Colorado being turned into giant open pit mines...

[J]

How's the environmental impact of shale oil processing compared to coal liquification? IIRC, it's better than coal, but I haven't found any reliable sources to back me up on that one.

It's better than coal liquifaction, making oil from coal is one of the worst ways to do it. Coal would have to be mined at an incredible rate, in the US it would have to be something like 4 billion tons of coal every year and that would cover only about half of US oil consumption, and at that rate coal only lasts for about 50-60 years. Nevermind the pollution from the process and the large amounts of natural gas or other sources of hydrogen needed for the conversion. And of course building all the railways, pipelines, power grids and other infrastructure to make it all work.

Currently there's two basic ways of producing oil shale, dig the rocks up and extract the oil from it or bake the rock in situ and pump the oil out. The first method isn't pretty to say the least, it would involve huge open pit mines where cubic kilometres of rock get blasted out, squeezed for oil and dumped back in, leaving a huge area of moonscape & rubble. In situ processing is quite a bit nicer, the land still has to be cleared but at least we're not leaving a blasted rubble-filled moonscape behind.

[Lord Zentei]

Let's hope it works, however given the past history of oil shale extraction schemes I'm not terribly optimistic. Also by my rough calculations, the entire yearly proposed production for Israel would cover about one day of US oil consumption. Promising, but a long way to go, and somehow I think the environmentalists would not be happy with a few hundred square miles of Colorado being turned into giant open pit mines...

It remains to be seen whether the production can be upgraded of course, but Israel alone will be only a minor contributor regardless of what happens - the question is how much production can be obtained from the big players with this method. As for the environmentalists, they can take a running jump considering what the stakes are (and I suspect that most voters will agree when push comes to shove).

[Ariphaos]

The US has roughly 1.2 trillion barrels of recoverable shale, or roughly 2/3rds of the planetary shale reserves. Dutch Shell also has a demonstrated method which is supposed to be ~$30 per barrel.

These processes take several years to complete. They're cheap, but slow through the pipeline.

[GrandMasterTerwynn]

The US has roughly 1.2 trillion barrels of recoverable shale, or roughly 2/3rds of the planetary shale reserves. Dutch Shell also has a demonstrated method which is supposed to be ~$30 per barrel.

These processes take several years to complete. They're cheap, but slow through the pipeline.

Well, I wouldn't quite call them cheap. They're still between three to six times the price of Middle Eastern oil (which currently costs roughly $5/barrel to produce. The global average cost of oil production is something like $7.38/barrel. Of course, plain old crude will become similarly expensive to produce within a couple of decades anyway.) And yes, they are slower and as a result, will net fewer barrels of oil per day than we're used to having now (in spite of the huge reserves of the crap that are sitting around.) That's fine assuming people are willing to live with less oil and the oil companies are willing to live with less than $55 or 1200% profit margins. This is promising stuff, but only as part of a more diversified collection of energy and fuel sources.

[Ariphaos]

Well, I wouldn't quite call them cheap. They're still between three to six times the price of Middle Eastern oil (which currently costs roughly $5/barrel to produce. The global average cost of oil production is something like $7.38/barrel. Of course, plain old crude will become similarly expensive to produce within a couple of decades anyway.) And yes, they are slower and as a result, will net fewer barrels of oil per day than we're used to having now (in spite of the huge reserves of the crap that are sitting around.) That's fine assuming people are willing to live with less oil and the oil companies are willing to live with less than $55 or 1200% profit margins. This is promising stuff, but only as part of a more diversified collection of energy and fuel sources.

'Cheap' in comparison to the rather expensive methods previously attempted. However, in the case of the US, I get the impression that there is a lot of room for reducing costs given the sheer size of the fields involved.

There's also nothing stating that Dutch Shell's methods and these methods don't have complimentary steps. So in ~20 years when patents clear (or perhaps sooner) there may be further reductions in cost based on technique alone.

Finally, the US at least does not get the cheapest-produced oil, since most of America's come from American (north or south) sources, much of which costs around $10 per barrel.