With more than 10 trillion barrels (Tbbl) of oil shale resources in place and advancing conversion technologies present, the outlook for development of this unconventional resource appears good, according to Khosrow Biglarbigi. There is a caveat that rises above the rest, however: the price of oil.

Speaking during a Society of Petroleum Engineers webinar, Biglarbigi, the president and director of petroleum engineering for INTEK Inc., said that for any project to work the economics must fall into place.

Oil shale is a carbonate rock containing kerogen. If the rock is heated to between 371 C and 426.7 C (700 F and 800 F), it goes through a chemical decomposition process called pyrolysis—in the absence of oxygen—and a vapor is formed, he explained. With upgrading, the vapor is condensed into liquid and then upgraded to synthetic crude.

“For this resource to be developed, it must compete with the other conventional and unconventional oil and gas resources at prevailing market conditions. The key driver to all of this is the oil price,” Biglarbigi said. The minimum economic price for oil shale to yield a rate of return of 15%—not profit but to cover the risks—varies depending on the type of technology.

For true in situ projects, Biglarbigi said the economic price is about $50/bbl. For hybrid technology, it’s about $60/bbl, compared to about $62 for surface mining and $75/bbl for underground mining. He noted that the costs are for first-generation plants.

Biglarbigi said he doesn’t see any challenges to developing oil shale that cannot be fixed if the economics are right.

“For surface retorting, the scalability is a major issue,” he said, noting that plants that are producing are not yet doing so on a commercial scale. “That’s concerning. Hopefully, with some of the hybrid technology and in situ technology we can work around the scaling issue.”

Additional challenges include water rights, water runoff, groundwater protection and water availability; between 1 bbl and 3 bbl of water are needed per 1 bbl of oil shale.

The other challenge has to do with the market, he said, using the U.S. as an example. America’s oil shale deposits are heavily concentrated in Utah, Colorado and Wyoming, which are believed to have 2 Tbbl of the 6 Tbbl of oil shale in the U.S. But attention is now focused on shale oil and shale gas, he said.

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