The term Shale oil has become unavoidable today when reading about the current states of affairs in the world of oil production. Its impact on the market is real and it is revolutionizing the industry not only in the United States, but it is starting to become a viable alternative in the global energy market. What is Shale Oil? How does it work? And how does it influence the industry? Today in Suzzanne Uhland’s blog we want to talk about the basics of Shale Oil extraction and its importance so you understand it a bit better and learn how it works in general terms.

What is Shale Oil?

Shale Oil is also known as light tight oil, so is not to be confused with synthetic crude oil derived from oil shale. This type of oil is one of unconventional extraction and comes from formations of low permeability that bear petroleum found in tight sandstone or shale. The type of crude oil that we are used to hearing about is normally found in liquid form, so its extraction is pretty straight forward in technical terms. Pressure is relieved when the deposits are drilled so the liquid is pushed out; after that, there are some other methods used in order to extract the rest of the crude and some of it is left behind since it requires yet more exhaustive methods for procurement. Shale oil is not as easily available for extraction like liquid crude is, so the process is a lot more complex because this oil is trapped in solid rock.

The process is by no means a new invention; Great Britain was extracting oil using this method from as early as the 10th century, but as large reserves of liquid crude were discovered, the practice became less and less economically feasible and it was mostly abandoned for easier methods of extraction and investments in research for finding conventional oil instead.

Shale oil extraction used to only be economically viable in countries that had no conventional crude oil available, but with rising oil prices the extraction of shale became popular once again and it started to make sense as an alternative.  

What is the process like?

As the petroleum is contained within the rock, then unconventional methods must be used in order to extract it. One of them uses extreme heat without permitting oxygen into the mix to liquefy the oil and extract it from the rock. The process can happen in the site or it can be done elsewhere with specialized tools that facilitate the operations. Another method that has become popular since the 60’s is that of hydraulic fracturing, also known as “fracking”. Fracking is a technique that injects a pressurized liquid made out of water, sand and some thickening agents that are inserted into the well in order to stimulate the extraction of particles rich in petroleum content. Hydraulic fracturing is a highly controversial method for extraction because its environmental impact since it not only uses large amounts of water, but it also leaves a residue that is very difficult to dispose off. Pollution of the air, ground and surrounding water is another reason why this practice is not executed in some countries in addition to the fact that it can even make areas more susceptible to earthquakes.

What does it mean for the industry?

It has been predicted that global shale production could reach up to 14 million of barrels per day by 2035. The ramifications of this could mean a total revolution to the way the industry operates nowadays and whom the main key players are when it comes to worldwide oil production. If this increase continues as predicted, that means that the prices of oil in the future will also be reduced by as much as 40% if considering the current predictions made by the Energy Information Administration that assumes low-level productions of shale oil in the next 30 years. This is not good news to the current leaders of traditional oil production around the world like Russia and countries in the Middle East unless they start implementing strategies to catch up with the current trends.

Talks today are as bold as to project that the United States may overtake Saudi Arabia as the new leader in global oil production as early as 2020. These type of ideas are becoming worrisome to the OPEC as they can no longer afford to ignore shale oil production as they seem to be losing their control over setting global oil prices.

Countries like Saudi Arabia have been making public their plans to move away from oil production as their main source of income and are looking into other strategies to offset the balance. These words coming from a country that has always been as powerful in the industry are clear indicators that the influence of shale oil production is a force to be reckoned with and that the global industry is truly being revolutionized.

* Featured Image courtesy of john mcsporran at Flickr.com