Unconventional Oil

Unconventional heavy oil deposits are found around the world. The western hemisphere holds an estimated 69 percent of the world's technically recoverable heavy oil and 82 percent of the technically recoverable natural bitumen[1]. In contrast, the Eastern Hemisphere, contains an estimated 85 percent of the world's conventional light oil reserves[2].

In 2002, the Oil & Gas Journal accepted Canada's classification of 174 billion barrels of tar sands as established reserves and Canada became the second largest oil reserve-holding nation in the world after Saudi Arabia[3].

Venezuela considers 235 billion barrels of extra-heavy oil recoverable, but these are not currently acknowledged as established or proven in the same way as Canada's oil sands.

While both of these deposits are large, they are dwarfed by the estimated 800 billion barrels of oil that is estimated to be recoverable from the oil shale deposits in the U.S[4]. The following graphic shows how the addition of unconventional oil deposits, such as U.S. oil shale, Canadian tar sands and Venezuela's extra-heavy oil, greatly affects the world's oil inventory[5].

Other notable unconventional oil deposits are: Brazil's offshore Campos Basin, Alaska's Prudhoe Bay, and China's Luda field in Bohai Bay.

Tar Sands

Tar sands (also referred as oil sands, bituminous sands, or extra-heavy crude oil) are a combination of clay, sand, water, and bitumen. Unlike crude oil that is extracted by drilling wells, tar sands are strip-mined or made to flow into producing wells by in situ techniques that reduce the bitumen's viscosity with steam and/or solvents. This latter process requires large quantities of water.

The two largest known tar sand deposits are the Athabasca Oil Sands of Canada and the Orinco Heavy-Oil Belt in Venezuela. These two deposits account for approximately two-thirds of the world's total tar sand resources. Much of the remaining third is believed to be found within the Middle East although exact figures are elusive.

Canada is the only country in the world producing oil from tar sands on a significant commercial level. While labour-intensive, tar sands producers maintain a comfortable profit margin when oil prices exceed $24 per barrel[6]. The tar sand industry in Canada represents over one million barrels per day equal to about 40% of domestic production with output expanding rapidly.

Canada

Most of the tar sands of Canada are located in Alberta and contain up to 2.5 trillion barrels of bitumen[7]. Of this amount, Canada's National Energy Board estimates that up to 315 billion barrels may be recoverable with current technology[8]. The largest tar sand deposit in Canada outside of Alberta is located on Melville Island in the Canadian Arctic. It has the potential to produce about 500 million barrels of crude oil.

The Athabasca tar sand deposit is the largest deposit and is currently economically viable for petroleum production. About 10% of the Athabasca tar sands are covered with less than 75 m of overburden consisting of 1-3 metres of waterlogged muskeg atop clay. The underlying tar sands are typically 40-60 metres thick above relatively flat limestone beds.

Great Canadian Oil Sands (now Suncor) began commercial production in 1967. The Syncrude mine, among the largest mines in the world, followed in 1978. The Albian Sands mine began operations in 2003.

Venezuela

The Venezuelan deposits are often referred to as extra-heavy oil as they exist in a viscous liquid form due to the higher temperature present there. They occur at greater depth than the Canadian tar sands making the extraction more difficult and capital intensive than in Canada. The Petróleos de Venezuela S.A. (PVDSA) has estimated that the Orinoco Belt contains 235 billion barrels of extractable crude from the 1.8 trillion barrels of heavy oil present.

Russia

Oil has been commercially produced in Russia and elsewhere in the former Soviet Union for more than 150 years. The world's first modern oil well was drilled near Baku in present-day Azerbaijan in the late-1840s. Russia's oil industry expanded through the latter half of the 19th century to the point where, by 1900, the country was producing roughly one-third of the world's oil.

In addition to significant conventional oil reserves, Russia also has considerable non-conventional oil resources. The U.S. Geological Survey (USGS) estimates that Russia has 13.4 billion barrels of technically recoverable heavy oil in the Melekess tar sands in the Volga-Ural Basin. Most of Russia's remaining 246.1 billion barrels of bitumen is located in the Olenik Highland in Eastern Siberia. The USGS estimates that 14% (33.7 billion barrels) of this second resource is technically recoverable.

Both of these deposits are currently uneconomical to extract.

United States

UtahUtah's heavy oil primarily ended with the sharp drop in oil prices in the mid-1980s and the high costs of extraction due to inefficient processing technologies.

Oil Shale

Oil shale is a general term applied to a fine-grained sedimentary rock containing enough organic material (called kerogen) to yield oil and combustible gas upon distillation. Oil shales contain higher levels of inert mineral matter (60-90%) than coals which are defined as having less than 40%. Much of the hydrocarbon material in oil shale is of algal origin in contrast to coal which is primarily derived from vascular land plants. A deposit of oil shale having economic potential is usually one that is accessible and large enough to justify extraction by open-cast, conventional underground mining or by in situ methods.

Deposits of oil shale are located all over the globe; however, many occur as minor accumulations of little or no economic value.

The largest known formation for oil shale is is Green River deposits located in Colorado, Wyoming, and Utah. This area contains an estimated 215 billion tonnes, equivalent to 1.2 to 1.8 trillion U.S. barrels[9]. However, The richest and most easily recoverable deposits are located in the Piceance Creek Basin in western Colorado and the Uinta Basin in eastern Utah. The following graphic shows the locations of these oil shale deposits[10].

The Devonian black shale deposits of the eastern United States are estimated to contain 423 billion barrels[11]. Not all of this oil in the U.S. oil shale deposits will be ultimately recoverable. For the 800 billion barrels that are, there is presently no proven technology for viable commercial extraction.

The United States Energy Information Administration estimates the world supply of oil shale at 2.6 trillion barrels of recoverable oil[12]. Brazil, China, Estonia, Germany, Russia and Scotland currently or recently have extracted oil from shale. Production from those six countries is shown in the following graph from 1880 to 2000[13].

Both Australia and the U.S. have established experimental pilot plants to determine the feasibility of extracting oil from their oil shale deposits. As the world continues to run out of cheap sources of oil, a ever increasing amount of attention will be given towards developing these unconventional oil sources.

References:

1. ^ In many cases, the term tar sands, bituminous sands, oil sands and extra-heavy oil are used interchangeably. For the purposes of this article, solid sources such as Canada's resources will be referred to as tar sands whereas those that can flow (ooze) like Venezuela's resources will be referred to as extra-heavy oil. The term 'bitumen' when used, will refer to both tar sands and heavy oil.
   
2. ^ Johnson, Where is Heavy Oil Found?
   
3. ^ Radler, Worldwide Reserves. Not all groups accept Canada's classification of tar sands as proven reserves. BP, for example, only credits those fields currently being developed, in keeping with its classification of other nations' reserves.
   
4. ^ The Oil Shale and Tar Sands Leasing Programmatic EIS considers 800 billion barrels to be a moderate estimate for recoverable oil from U.S. oil shale deposits.
   
5. ^ Taken from data collected from the following sources. Conventional light oil reserves are taken from World Oil, Vol. 227, No. 9 September 2006. The technically recoverable oil from U.S. oil shale is taken from the Oil Shale and Tar Sands Leasing Programmatic EIS. Conventional tar sands from Canada supplied by Statistics Canada, Statistics Energy Handbook, October 2006 to December 2006. Figures for Venezuelan and Russian technically recoverable unconventional oil resources are from the U.S. Geological Survey.
   
6. ^ National Energy Board, Opportunities and Challenges.
   
7. ^ Bob Williams, "Heavy Hydrocarbons Playing Key Role in Peak-Oil Debate, Future Energy Supply", Oil & Gas Journal 101, no. 29 (2003).
   
8. ^ National Energy Board (Canada), Canada's Oil Sands: A Supply and Market Outlook to 2015.
   
9. ^ U.S. Geological Survey, Geology and Resources of Some World Oil-Shale Deposits.
   
10. ^ Utah Geological Survey, Re-examination of Utah's oil shale deposits: Historical database and new resource evaluation.
    
11. ^ World Energy Council, 2004 Survey of Energy Resources.
    
12. ^ Energy Information Administration, Annual Energy Outlook 2006.
    
13. ^ World Energy Council, 2004 Survey of Energy Resources.
    

Mike Hewitt

Editor

DollarDaze.org

Mike Hewitt is the editor of www.DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies.

Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.

© 2007 DollarDaze

Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author.