Shale Oil

Leesa Carson (leesa.carson@ga.gov.au)

Oil shale is organic-rich shale that yields substantial quantities of oil (normally referred to as shale oil) and combustible gas by heating (retorting) and distillation. The organic material in oil shale is called kerogen, which, under appropriate conditions in the Earth's crust, can be a precursor to conventional oil reservoirs. One tonne of commercial grade oil shale may yield from about 100 to 200 litres of oil.

Resources

The majority of oil shale resources of commercial interest are located in a series of narrow and deep extensional-basins near Gladstone and Mackay, and further north near Prosperpine in central Queensland (Qld). These are thick Cenozoic lacustrine (lake-formed) deposits that are relatively easy to mine and process compared to carbonate-rich oil shales (marls) elsewhere in the world. The Permian Galilee and Bowen Basins in Qld contain oil shale associated with coal measures. Oil shales occur in the Cretaceous Toolebuc Formation of the Eromanga Basin in northwest Qld. Oil shale deposits of varying quality are located in the Sydney Basin, New South Wales (NSW), at the Latrobe tasmanite deposit in northern Tasmania (Tas), at Eyre Peninsular in South Australia (SA) and within an oil shale-heavy mineral sand deposit in southern Western Australia (WA).

Resource estimates were reviewed to take into account the historic nature of the estimates and losses resulting from processing. Australia's shale oil resources estimates are for recoverable shale oil. Paramarginal and Submarginal Demonstrated Resources of shale oil as at the end of 2011 are 213 gigalitres (GL) (about 1340 million barrels) and 2074 GL (about 13 050 million barrels) respectively. Both figures are unchanged from 2010.

An Inferred Resource is estimated to be 1272 GL (about 8000 million barrels), also unchanged from 2010. This figure excludes the total potential shale oil resources of the Toolebuc Formation (Qld) estimated to be around 245 000 GL. This estimate was made by Geoscience Australia's predecessor, the Bureau of Mineral Resources, and the CSIRO in 198364. The research project undertook detailed geological, petrophysical and geochemical examination of the oil shales of the Toolebuc Formation. The project aimed to investigate and develop methods to assist government and industry to assess the potential of the sedimentary sequence as a possible future source of oil shale and to develop an understanding of geological controls and the distribution of oil shale within the Toolebuc Formation. A resource assessment of around 245 000 GL was based on productive oil shale covering an area of 484 000 square kilometres and ranging from 6.5 to 7 metres (m) thick with a specific gravity of 1.9 and yielding an average 37 litres of oil per tonne oil shale.

Exploration

In Queensland, the majority of exploration activity has been in care and maintenance since the Queensland Government announced a two-year review into the oil shale industry and a 20-year moratorium (recently lifted) on oil shale development in the Whitsunday region around Proserpine. Previously, exploration was predominantly focused near Gladstone and Mackay in central Qld and in northwest Qld. In Tasmania, Boss Energy Ltd is continuing to undertake exploration work southeast of Devonport at the Latrobe oil shale deposit and Eagle Nickel Ltd is assessing exploration tenements adjacent to the Latrobe project. Data associated with shale oil exploration are not available.

Production

There was no oil being extracted from oil shale in Australia between 2004 and September 2011. From 2000 to 2004, the previous demonstration processing plant at the Stuart deposit (Qld) produced more than 1.5 million barrels of oil using a horizontal rotating kiln process (Alberta Taciuk Process). The facility has been dismantled and the site remediated.

In September 2011, Queensland Energy Resources Ltd (QER) produced its first crude oil from its demonstration Paraho IITM vertical shaft kiln processing plant at the Stuart deposit near Gladstone, central Qld. The oil is being stored in secure tanks on-site, awaiting commissioning of the oil upgrading unit (refinery).

The QER demonstration plant achieved stable production capacity of 6000 tonne of shale per day and oil yield totalling 4500 barrels per stream day while maintaining product quality and adhering to Environment Protection Authority emissions limits. The oil products from the demonstration plant were Ultra Low Sulphur Naphtha (ULSN) 55% to 60% and Light Fuel Oil (LFO) 40% to 45%. The ULSN, which can be used to make petrol, diesel and jet fuel, has a sulphur content of less than one part per million (ppm). To put this into perspective, from 1 January 2008, the Fuel Standard (Petrol) Determination regulated that the maximum content of sulphur is 50 ppm in premium unleaded petrol.

World Ranking

The 2010 Survey of Energy Resources by the World Energy Council (WEC) reported that total world in-place resources of shale oil are estimated to be 4.8 trillion barrels. The largest known deposit is in the western USA (3 trillion barrels in-place resource), with other important deposits in China, the Russian Federation, the Democratic Republic of the Congo, Brazil, Italy, Morocco, Jordon and Estonia, as well as Australia. Only Estonia, China and Brazil produce shale oil. The WEC survey reported that total oil production at the end of 2008 was about 1165 ML, with Estonia producing 445 ML, China 470 ML and Brazil 250 ML.

Industry Developments

In August 2008, the Queensland Premier announced a review into whether oil shale deposits can be developed in an environmentally acceptable way. The review report is to be prepared no earlier than two years from the commencement of operation of the QER Stuart facilities in order to allow that research to come to fruition. Queensland Energy Resources produced its first crude oil in September 2011 and submitted a final report to the Queensland Government in September 2012 indicating that there were no reportable environmental incidents at the plant during all phases of construction, commissioning and operations, and that there were no community complaints about odour and noise.

In November 2008, Queensland Government amendments to the Mineral Resources Act 1989 (Qld) placed a 20-year moratorium on oil shale mining in the Whitsunday region around Proserpine. The granting of new tenures and variation of existing entitlements relating to oil shale were suspended until the state government considered the report on an oil shale review. In February 2013, the Queensland Government lifted the moratorium on shale oil except for the McFarlane oil shale deposit. The government will now consider all projects on a case-by-case basis.

In Queensland, several companies have either scaled back investment or revised projects. These companies include:

  • Australian Thermal Solution Pty Ltd, a subsidiary of Blue Ensign Technologies Ltd (Julia Creek Project (south), northwest Qld), which, in June 2009, was planning to build a demonstration plant to test the thermal solution technology (Rendall Process), a thermal conversion and hydrogenation, followed by supercritical solvent extraction.
  • Greenvale Mining NL (Alpha project, Qld), which continues to review the viability of Vertical Retort Torbanite (VRT) processing technology being developed by a South African based company.
  • Xtract Energy Plc (Julia Creek Project (north), northwest Qld) has scaled back investment in the development of the Xtract technology, a hydrogen and supercritical solvent extraction process.

In Tasmania, Boss Energy Ltd engaged the Chinese company, Fushun Mining Group (FMG), to carry out tests on a 500 kg tasmanite oil shale sample from the Latrobe project using Fushun vertical retort technology to determine physical and chemical properties and key operating parameters. Results were positive returning a 9.5% crude oil content and very similar chemical and physical properties to Fushun's oil shale. Boss Energy has written a letter of intent with respect to forming a Joint Venture agreement with FMG and is awaiting a response.

Endnotes

64 Ozimic, S. and Saxby, J.D., 1983. Oil Shale Methodology: An examination of the Toolebuc Formation and the laterally contiguous time equivalent units, Eromanga and Carpentaria Basins. Bureau of Mineral Resources and CSIRO research project.