In 2018, 80% of the U.S. primary energy consumption came from conventional fossil fuels. There has been growing concern about the availability of energy from fossil fuels due to dwindling resources and rising global energy consumption.
In the past, the oil and gas industry perceived tight formations, such as shale, impermeable and, therefore, oil trapped therein unviable to extract. Further, technology to extract from these sources was not sufficiently developed. Advances in well drilling and reservoir stimulation have altered this mindset. This is resulting in a burgeoning new field of extracting unconventional sources of fossil fuels.
What are Unconventional Fossil Fuels?
Unconventional fossil fuels are named so because of their geology in comparison to conventional fossil fuels. Their geology requires that unconventional extraction methods need to be used as opposed to the methods used for conventional sources. Conventional energy comes from fossil fuels, organic compounds formed from the decomposition of plants and animals over time creating substances that we know as coal, natural gas, and petroleum. Conventional oil and gas deposits are found in porous and permeable sandstone and carbonate reservoirs. In contrast, unconventional energy is extracted from fine-grained, organic-rich sedimentary rock such as shales.
Conventional fossil fuels are found in easily accessible reservoirs, whereas unconventional fossil fuels can be found in pore spaces of a wide geological formation and thus require more advanced techniques of extraction. The lack of permeability of the formations mean that the oil and gas remain in the rock until natural fractures occur. These fossil fuels cannot be retrieved through traditional drilling methods. Fractures need to be induced to extract them. To simplify, unconventional fossil fuels are simply conventional oil that is hard to get out.
Drivers for Exploring Unconventional Fossil Fuels
Conventional oil production is on a global decline. However, contrary to conventional wisdom, oil is not running out. It is, instead, available in a different form. Unconventional fossil fuels are changing the way we plan our energy requirements globally. These new sources of energy have been gaining attention in the recent past for a few reasons.
1. Costs of greenhouse gases
The need to limit emissions of greenhouse gases are having an increasing impact on policy and regulation. Various regulatory constraints on carbon dioxide emissions into the atmosphere are likely to emerge. These constraints would add to the costs of production of conventional fuels due to their greenhouse gas intensity.
2. Concerns about energy security
The oil price shocks of the 1970s provoked a wave of concern about the adverse consequences of high and unstable oil prices. Many nations also want to reduce or eliminate reliance on the Organization of the Petroleum Exporting Countries (OPEC), who they perceive as restricting output in order to price supply above competitive market rates.
To ensure global energy security, all sources of energy, including fossil fuels, renewable energy, and nuclear, will be needed. By substituting conventional oil with unconventional fuel sources in an efficient manner (in terms of both cost and production process), international oil prices could potentially lower. The price of crude oil increased 115% from 2000 to 2018, making a better case for unconventional fossil fuels when speaking about price.
Major Sources of Unconventional Fossil Fuels
1. Oil Sands
Oil sands are a loose sand deposit mixture of 83% sand, 10% bitumen (a semi-solid mix of hydrocarbons with the consistency of tar), 4% water, and 3% clay. Oil sands deposits exist in 23 countries. Canada has about 73% of the world’s oil sands.
For the manufacturer of petroleum products, the bitumen is extracted from the oil sands by removal of the solids and water. For deposits closer to the surface, the oil sands are mined and then transmitted to a bitumen processing plant. For deposits that are deeper below the surface, bitumen extraction takes place in-situ. Bitumen extracted is too heavy to be sent to a conventional refinery, due to a high content of asphaltene and sulphur. The product therefore needs to be upgraded to a lighter, intermediate crude oil. This synthetic crude oil can then be further refined into final products like gasoline, diluents, and lubricants.
2. Oil Shale
Oil shale is a sedimentary rock that contains deposits of kerogen that has not undergone the geological pressure and heat to turn into conventional oil. Kerogen is fossilized organic material embedded in the sedimentary rock. Further, these deposits have not seen enough time pass for them to be transformed into conventional oil and gas.
The process of extracting shale oil presents more of a challenge than extraction of liquid crude oil from conventional wells. Oil shale must first be mined from the ground using either underground or surface-mining techniques. Oil shale then undergoes a process called retorting, during which the shale is exposed to high temperatures in the absence of oxygen. A chemical change occurs, causing the kerogen in the rock to separate as a liquefied oily substance. The oily substance must then undergo a refining process to transform into a synthetic crude oil that can be used.
3. Coalbed methane
During coalification, the natural process of conversion of plant material into coal, water saturates the coal and methane gas is trapped within it. Coalbed methane is a form of natural gas that can be recovered from coal deposits or coal seams. Coal deposits are locations with accumulations of coal that can be mined, while coal seams are coal deposits captured in underlying rock.
To extract the methane, wells are drilled into coal seams, and groundwater pumped out. Removing the water from the coal seams lowers the reservoir pressure and is essential to release the gas from the coal. As the water is pumped to the surface, the methane gas follows. Pipelines capture and transport the gas to storage facilities or for shipping.
4. Methane hydrates
Often referred to as “fiery ice,” methane hydrates are crystalline solids situated below the floor of the deep ocean and in arctic regions. The substance looks like ice but can be set on fire, hence its name. They occur as methane molecules trapped within a cage of water molecules. Methane hydrates have been the focus of attention in parts of Asia, such as Japan and India, where reserves of conventional fuels are small.
Methane hydrates are an abundant source of unconventional fossil fuels but are the most difficult to extract. Drilling rigs need to be able to reach through thousands of feet of water to reach the ocean floor and then another several thousand feet to extract the hydrates. Even if the drilling rig can reach this depth, methane gas escapes as it is being transported to the surface. Japan and China have been successful by using technology that depressurizes the methane hydrates on the sea bed and channels the gas to the surface.
Key Technologies of Unconventional Fossil Fuel Production
The technologies involved in unconventional fossil fuel production and extraction are often perceived as relatively new, and therefore, a risky business. The fact is that the underlying technologies used have been around for decades. However, production technology is constantly evolving. Technologies in directional drilling and hydraulic fracturing were first applied to shale gas formations. Methane molecules and natural gas liquids were found to be more responsive to hydraulic fracturing. The following are some important technological advances employed in the production of unconventional fossil fuels:
1. Horizontal drilling
As opposed to drilling a reservoir vertically, horizontal wells remain within the formation by drilling in a lateral direction. Horizontal wells improve the exposure of the rock being drilled exponentially when compared to vertical drills. Therefore, the number of wells, surface expression of drilling, and the cost of drilling is reduced. However, it is a more costly method than vertical drilling
2. Multilateral wells
Multilateral wells are a stack of horizontal or near-lateral wells that drill from a single main bore. Multilateral wells reduce the surface expression of drilling, cost of drilling, and the number of wells required.
3. Hydraulic fracturing
Possibly the most well known of the unconventional fossil fuel technologies, hydraulic fracturing or “fracking,” as it is commonly called, involves injecting high-pressure fluids down boreholes to fracture rocks. Rocks fracture when the pressure of the fluid exceeds the tensile strength and least principal stress of the rock. Fracking creates permeability in the rocks and causes the hydrocarbon-filled pores to bind with the wellbore.
There has been public outcry regarding hydraulic fracturing due to potential contamination of drinking water and surface water. 99.5% of the fluid injected consists of freshwater and sand proppant. But 0.5% comprises chemicals that serve a host of functions, such as dissolve minerals, minimize friction, remove oxygen from water, kill bacteria, and remove pipe scale.
4. Microseismic monitoring
This technology involves placement of receivers in an adjacent observation well or on the surface to record microseismicity induced by the injection of the fluids. Microseismic monitoring provides information about the orientation and distribution of induced fractures so that the hydraulic fracturing process can be adapted in real time. The technology can identify where space has not been created yet by fracture propagation. The location and progress of fracture propagation can also be measured as it occurs. Inducing fractures in wells, particularly in populous areas, has also been a public concern with regard to hydraulic fracturing.
Unconventional fossil fuels can be developed with significant economic benefits. Economic benefits arise to the entire production supply chain from the development of unconventional fossil fuels. Manufacturers benefit from the lower costs of feedstock and energy, and jobs are created for the population.
In the U.S., where commercial drilling is well established, the primary economic impact of unconventional oil and gas has been to drive down natural gas prices. This has a ripple effect across the energy industry. Lower energy costs drive down production costs for companies as well as households. Changes in energy prices also cause a new mix of energy-intensive businesses to emerge in the economic fabric of society.
Further, if unconventional sources are taken into account, global oil reserves emerge at a figure that is quadruple that of conventional reserves.
1. Greenhouse gases
In order to avoid the most adverse impacts and the risk of irreversible changes to the climate, carbon emitted to the atmosphere must be limited to a total of 500 billion tonnes (or gigatonnes). Since the start of the industrial revolution, 370 gigatonnes has already been emitted, leaving 130 gigatonnes that could be added before dire consequences arise. Studies suggest that greenhouse gas emissions from unconventional fossil fuels are equivalent to or only slightly lower than those from conventional fossil fuels.
Production of a barrel of oil from oil shale uses 2.6 to 4 barrels of water and a barrel of oil from oil sands uses 2.3 to 5.8 barrels of water. In comparison, a barrel of crude oil requires 1.4 barrels of water. Coalbed methane production removes groundwater and also pollutes water through activities such as construction, drilling, leaks, chemical spills, and discharge of wastewater. Wastewater and flowback water can also contain high levels of trace elements and naturally occurring radioactive materials.
3. Air emissions
Air emissions from unconventional fossil fuel development have also raised concern among the public. Methane, volatile organic compounds, nitrogen oxides, sulfur dioxide, particulate matter, and other hazardous air pollutants are released during various stages of the production process.
Since unconventional fossil fuels are more difficult to access, they demand more energy and occupy more land. They also produce more waste. The growth of the unconventional fossil fuels industry may replicate this pattern across the world resulting in harmful impact to wildlife and local communities exposed to the impacts of extraction.
Based on the recommendation of The International Panel for Climate Change (IPCC), an international consensus is being reached to aim for a temperature increase of no more than 2 degrees Celsius over pre-industrial levels. This commitment is reflected in the 2015 UN Paris climate agreement, which is binding on all signatories and aims to counter the effects of climate change.
Based on the climate modeling and various weather scenarios posed in the IPCC report, the global carbon that can be permissibly emitted can be estimated. While this carbon budget has been mapped out, there is less certainty as to how this will be achieved and what kind of hit the fossil fuel industry will have to suffer.
Under these constraints, the majority of the world’s fossil fuels would need to remain untouched. Although global demand for both conventional and unconventional fuels grows, production of both is likely to decline. Increased renewable energy production, higher demand for electric vehicles and shifting of the burden of emission cuts from developing to developed countries are likely to produce a fall in the market share of unconventional oil and gas.
Developing countries derive their energy by a heavy reliance on coal, which outstrips that of developed economies. In the event that developing countries do not meet their mitigation targets, the developed world may find themselves having to shoulder this burden in order to keep emissions within the carbon budget. This would therefore imply larger cuts in existing oil and gas production than previously expected.
Carbon Capture and Storage
In the development of unconventional fossil fuels in the context of reducing carbon emissions, a key element is the process of carbon capture and storage. Carbon capture and storage efforts are required to be made on the production front as well as usage.
Carbon capture and storage is the process of capturing carbon dioxide at the generation point and depositing it so that it is not released into the atmosphere. To accomplish this, it is usually deposited into an underground geological formation. Although carbon dioxide has been injected into underground geological formations for several decades for various purposes, the notion of long term storage is a relatively new concept. Carbon is not usually stored in the ocean because of the risk of acidification of the ocean.
Carbon capture and storage could be instrumental in fulfilling the objectives of the 2015 UN Paris agreement. Long term predictions about security of this underground storage are still uncertain, and there is yet a concern that some carbon dioxide might leak into the atmosphere.
Outlook for the Future
Replacing conventional oil sources with unconventional fossil fuel sources is not viable. Supplementing conventional oil supply seems like a more realistic outlook. While future production growth from unconventional oil sources will help ameliorate the natural decline in production from conventional oil fields, it seems unlikely to replace it completely.
With regard to capital, unconventional fossil fuel projects require a substantial investment. Further, viability needs to be re-evaluated when considering the long lead times from investment decision to first production that are typical of the industry.
While the high price of conventional oil may make it more financially profitable to retrieve fuel from unconventional sources, the energy return on investment is a different story. Energy return on investment here refers to the amount of energy from a well versus the energy expended to produce the oil. Benefits to energy supply degrade over time as collateral damage to the climate goes up.