Potential for Oil Shale Development in the United States

Khosrow BiglarbigiHitesh Mohan

Marshall Carolus

INTEK

July 15, 2009Calgary, Canada

2

America’s Oil Shale

• Resource• Technology• Economics• Environmental• Path Forward

3

What is Oil Shale?

RockKerogen

Pyrolysis

Upgrade

700 - 800 °F

Syn- Crude Naphtha

Jet Fuel

Diesel

Nat. Gas

Hydrogen

4

10 Trillion Barrels of Shale Oil Worldwide

United States

Zaire

Russia

Brazil

Italy

Morocco

Estonia

China

Canada

France

Egypt

Australia

IsraelJordan

Countries With Oil Shale Deposits

5

Most Concentrated Hydrocarbon Deposit

2 Trillion Barrels

6 Trillion Barrels

Source: US DOE, 2004

6

The Mahogany Zone

• The Most Prolific

• Up to 1000 Ft Thick

• Up to 75 Gal/Ton

Source: Redleaf Resources, 2008

7

Oil Shale Production Oil Shale Production ApproachesApproaches

Mining Retort UpgradingResource Refinery

Surface ProcessSurface Process

Drilling Heating UpgradingResource Refinery

In Situ ProcessIn Situ Process

Source: US DOE, 2004

Choke Point

8

Shell In-Situ Conversion Process

Source: US DOE, 2008

High Value ProductsPilot Test (Colorado)Pilot Test (Colorado)

Light Surface Processing

HEATER

PRODUCER

OVERBURDEN

9

Other Examples of In-SituPilot Tests (Colorado)Pilot Tests (Colorado)

IDT–EGL Resources ProcessChevron Process

FracturesFractures

Injector

Producer

Source: US DOE, 2004

10

Ecoshale In-Capsule Technology

Source: Redleaf Resources, 2008

HOT GAS

COOL GAS

Pilot Test (Utah)

11

Alberta Taciuk Processor (ATP)

Pilot Test (Utah)Pilot Test (Utah)

PreheattubesVapour

tube

Combustionzone Retort

Preheattubes

Coolingzone

Oil shalefeed

750°C

500°C 250°C

Source: US DOE, 2006

12

Gas Combustion Retort (GCR)

• Australia (Project Scale Up)

• Brazil (In Production)

• China (In Production)

• Estonia (In Production)

• USA (In Pilot)

Source: US DOE, 2007

Raw Shale

Spent Shale

RESIDUE COOLING

COMBUSTION

STRIPPING

PYROLYSIS

PREHEATING

Oil MistExtractors

Raw Shale

Spent Shale

RESIDUE COOLING

COMBUSTION

STRIPPING

PYROLYSIS

PREHEATING

RESIDUE COOLING

COMBUSTION

STRIPPING

PYROLYSIS

PREHEATINGMIST FORMATION

13

First Generation Project Costs

Item Unit Range

Capital Cost $/BPD

O&M Cost $/Bbl 12-20

40K-55K*

* Barrel of Daily Capacity

Source: INTEK, Inc., 2006

14

Economic Price for Oil Shale Technology

True In-Situ

Surface Mining

Underground Mining

2007

Do

llar

s P

er B

bl

In-Capsule

$38

$47

$57Rate of Return – 15%

$0

$10

$20

$30

$40

$50

$60

$70

$35

Source: INTEK, Inc., 2008

15

Breakdown of Economic Price for Generic Surface Mining

$47/Bbl

Operating Costs38%

Risk Premium9%

Taxes 19%

Cost of Capital19%

Transfer Payments14%

Source: INTEK, Inc., 2008

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Oil Shale Environmental Impacts

Air Quality

Oil Shale Processing

HCGas CO2 SOx NOx

• CO2 Enhanced Oil Recovery• Sequestration• Other Industrial Uses

Capture and Clean Existing Technology

Process Plant Use

Source: SPE #110590, 2007

17

Land Use

• 1 MMBbl/D Production for 40 Years– Surface: 31 Square Miles

– In-Situ: 14 Square Miles

• A Small Footprint for a 2.5 MMBbl/D Industry:

Source: SPE #110590, 2007

2.5 MMBbl/d

52 Square Miles

Green River

17,000 Square Miles

2.5 MMBbl/d

52 Square Miles

Green River

17,000 Square Miles

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Water Requirements

• 1-3 Barrels of Water per Barrel of Shale Oil

• Challenges:–Water rights–Ground water protection–Water runoff

Source: US DOE, 2007

19

Development Hurdles

• Access to Land

– 70% on Federal Land

• RD & D

• Environmental Permitting

• Fiscal Regime

Total Resource6 Trillion Barrels

High Quality Resource2 Trillion Barrels

Technical Recovery

1 Trillion Barrels

Reserves600 – 750Billion Bbls

The Prize

$50 - $65 / Bbl

@

Source: INTEK, Inc., 2008

21

0

500

1,000

1,500

2,000

2,500

2005 2010 2015 2020 2025 2030 2035

Year

Th

ou

san

d B

bl/

DProduction Potential

(Shale Oil in the U.S.)

Base

Tax Incentives

RD&DAccelerated Scenario

Measured Scenario

Business as Usual

Source: US DOE, 2007

22

Summary

• Over 6 trillion barrels of in place resource

• The most concentrated hydrocarbon deposits on Earth

• Conversion technologies are advancing rapidly

• Sustained production potential of up to 2.5 MMBbl/Day

• Substantial economic benefits

• Requires concerted effort by the private sector, governments, and local communities