Investors will be able to take advantage of the technological advances and the rising prices for energy by taking a look at what is happening in the shale gas and oil industry. The potential supply of oil is enormous. The global supply of oil in shale beds may contain as much as 800% to 900% more oil than all of the conventional wells that are currently in operation.
Previous methods of extracting oil from the shale had proved cost prohibitive. It also is difficult to justify if one wishes to consider that it is more damaging to the environment than other forms of energy extraction.
However, a second shale revolution is about to commence driven by advances in technology in the extraction process. There are several new ways that the oil and gas contained in the shale will be recovered.
Not to be confused with fracking which is the process employed for a different source of gas and oil, the principle method here is based on a heating or cooking of the shale. This permits access to the oil and gas contained in the bedrock. It also calls for the process to be done in a cheaper and more efficient way then was done in the past. In Western countries it will also need to be done in a more environmentally friendly way, which of course will increase costs. The hope will be that it can still be done efficiently.
An investor in the new processes also needs to understand that these shale reserves are different depending on where they are located. As with other forms of oil and gas deposits there is a great variance in quality.
The first question an investor may have is where are these energy resources located? By far, the largest reserves at 301 billion metric tons are located in the United States. The United States alone contains about ¾ of the available world supply of this source of energy. The American deposits are mostly located in 2 main geographic areas. The western shale sedimentation(one of the richest in the world) can be found at the Green River Formation which comprises territory in the states of Colorado, Utah, and Wyoming. It is important to note that these shale reserves have a high content of arsenic in some areas. The eastern United States shale oil deposits are located in the area known as the Devonian-Mississippi shales. The area covers over 250,000 square miles or 650,000 km2.
In Canada the best deposits discovered so far have been found in New Brunswick and Nova Scotia. Canadian reserves are just a fraction of what has been shown to exist in the United States.
Brazil has the world’s second largest known shale oil resources. Globally, Brazil is the second largest shale oil producer after the nation of Estonia. The Brazilian deposits are found in Sao Mateus do Sul, Parana, and in Vale do Paraiba. The Brazilians have developed the world’s largest surface oil shale pyrolsis process at Petrosix. The operation involves a thermo-chemical decomposition of the organic material found in the shale rock. This is achieved by creating elevated temperatures in the absence of oxygen. It brings about a change in the chemical composition of the shale rock which permits the extraction of oil and gas.
In Africa, the largest shale resources are mostly found in the Democratic Republic of the Congo and Morocco. Deposits here are estimated at 14.31 billion metric tons and 12.3 billion metric tons respectively. Smaller amounts can be found in Egypt, Madagascar, Nigeria and South Africa.
The largest known shale reserves in Asia are located in China. There are estimated reserves of 32 billion metric tons bit only about 1/8 of the total is at present exploitable. Thailand is next in Asia with reserves of 18.7 billion metric tons. Kazakhstan and Turkey follow with smaller reserves. There are also some reserves in Armenia, India, Mongolia, Myanmar, Pakistan and Turkmenistan.
Although not yet fully confirmed, Uzbekistan may end up having the largest reserves of oil shale deposits in all of Asia with over 45 billion metric tons.
Australia has an oil shale resource of about 58 million metric tons which is equivalent to 4.5 billion metric tons of shale oil. It will allow for about 24 billion barrels to be extracted. The biggest reserves in Australia are presently found in Queensland. Smaller deposits have also been found in New Zealand.
In Europe the biggest oil shale reserves are located in Russia with reserves equal to 35.5 billion metric tons of shale oil. Major deposits are found in the Volga-Petchyorsk province and in the Baltic Oil Shale Basin.
Other major oil deposits in Europe are to be found in Italy with 10.5 billion metric tons of oil and Estonia with 2.5 million metric tons. These nations are followed by France and Belarus with 1 billion metric tons of shale oil each. Next in line are Sweden, Ukraine, and the United Kingdom with 875, 600, and 500 million metric tons of shale oil respectively.
In the Middle East the most significant reserves are to be found in Jordan and Israel. Jordan alone has 5.24 billion metric tons of oil. Although the shale is of high quality the sulfur content is relatively high. Israel has reserves of 550 metric tons of shale oil but it is relatively low in heating value and oil yield.
An investor will want to know what process works best in extracting the fossil fuels contained in the shale rock. Of course as always, the biggest consideration will be cost. A number of major energy firms from around the world, have tried to harness the vast potential of shale oil before. It was soon discovered that they energy consumed in extracting the oil and gas from the shale rock was so intensive, that profit margins were going to be too thin, to justify the expense.
New technologies and processes are now bringing this cost of extraction and production down.
As previously with fracking, the hope is that new techniques now being employed will allow a fuller exploitation of shale rock. With new methods of extraction the anticipation is that vast new supplies of energy will soon be available for consumption. It will totally change the present energy market.
Leaders in the industry include Enefit based in Estonia. This company for example, initiated an agreement last month with a number of partners to build a shale powered plant costing $2.1 billion USD (United States Dollar) in Jordan. It is expected to produce 540 Megawatts of power once in operation.
Queensland Energy Resources based in Australia is now going from the experimental and demonstration phase to actual commercial sized production. The new power plant is expected to be on line by 2018.
Questerre Energy from Cananda is looking to begin operations in the United States with an upcoming project in Utah.
Royal Dutch Shell from the Netherlands is attempting to extract oil in Jordan by a new experimental process that will heat the rock underground with an electric current. Once released from the rock the oil could then be easily be pulled out.
Enefit has become the most efficient in the industry at present. After the rock is heated and the oil is and gas is extracted the remaining material is burned. This produces steam which drives a generator thus producing electricity. The remaining ash can then be used in the production of cement. The company has been producing power and energy since the end of 2012.
The industry can remain profitable on the whole as long as world oil prices remain above $75 USD per barrel. When an investor considers present world events, it is not hard to determine that market prices will remain above this benchmark. The price for a barrel oil at the close of business yesterday was over $103 USD for WTI (American oil) and over $110 USD for Brent.
The only major drawback is the large cost in setting up operations. That is why it makes sense for a potential investor to concentrate efforts on existing companies with a proven track record. The only other consideration must be to consider geographic location, in regards to political an economic stability. For example, Jordan might have seemed to be a good place to make an investment in the past. Recent events in that part of the world, may well jeopardize a company’s investment there.