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INTEK Potential for Oil Shale Development in the United States Khosrow Biglarbigi Hitesh Mohan Marshall Carolus July 15, 2009 Calgary, Canada America’s Oil Shale • Resource • Technology • Economics • Environmental • Path Forward 2 What is Oil Shale? Syn- Crude Upgrade Naphtha Rock Kerogen Jet Fuel 700 - 800 °F Pyrolysis Diesel Nat. Gas Hydrogen 3 10 Trillion Barrels of Shale Oil Worldwide Estonia Canada France Italy United States Morocco Russia Israel Jordan China Egypt Zaire Brazil Australia Countries With Oil Shale Deposits 4 Most Concentrated Hydrocarbon Deposit 2 Trillion Barrels 6 Trillion Barrels 5 Source: US DOE, 2004 The Mahogany Zone • The Most Prolific • Up to 1000 Ft Thick • Up to 75 Gal/Ton 6 Source: Redleaf Resources, 2008 Oil Shale Production Approaches Surface Process Resource Mining Retort Upgrading Refinery Choke Point In Situ Process Resource Drilling Heating Upgrading Refinery 7 Source: US DOE, 2004 Shell In-Situ Conversion Process High Value Products Pilot Test (Colorado) Light Surface Processing PRODUCER HEATER OVERBURDEN 8 Source: US DOE, 2008 Other Examples of In-Situ Pilot Tests (Colorado) Chevron Process IDT–EGL Resources Process Producer Injector Fractures 9 Source: US DOE, 2004 Ecoshale In-Capsule Technology Pilot Test (Utah) Source: Redleaf Resources, 2008 10 Alberta Taciuk Processor (ATP) Pilot Test (Utah) Combustion zone Retort Vapour tube 500°C Preheat tubes Cooling zone Oil shale feed 250°C 750°C 11 Source: US DOE, 2006 Gas Combustion Retort (GCR) Raw Shale Oil Mist Extractors • Australia (Project Scale Up) • Brazil (In Production) • China (In Production) PREHEATING PREHEATING MIST FORMATION PYROLYSIS PYROLYSIS STRIPPING STRIPPING COMBUSTION COMBUSTION • Estonia (In Production) RESIDUE RESIDUE COOLING COOLING • USA (In Pilot) Spent Shale 12 Source: US DOE, 2007 First Generation Project Costs Item Unit Capital Cost $/BPD O&M Cost $/Bbl Range * 40K-55K 12-20 * Barrel of Daily Capacity 13 Source: INTEK, Inc., 2006 Economic Price for Oil Shale Technology 2007 Dollars Per Bbl $70 $60 $47 $50 $40 $57 Rate of Return – 15% $35 $38 $30 $20 $10 $0 In-Capsule Source: INTEK, Inc., 2008 True In-Situ Surface Mining Underground Mining 14 Breakdown of Economic Price for Generic Surface Mining Taxes 19% Transfer Payments $47/Bbl 14% Risk Premium 9% Operating Costs 38% Cost of Capital 19% Source: INTEK, Inc., 2008 15 Oil Shale Environmental Impacts Air Quality Process Plant Use • CO2 Enhanced Oil Recovery • Sequestration • Other Industrial Uses Capture and Clean Existing Technology HC Gas CO2 SOx NOx Oil Shale Processing 16 Source: SPE #110590, 2007 Land Use • 1 MMBbl/D Production for 40 Years – Surface: 31 Square Miles – In-Situ: 14 Square Miles • A Small Footprint for a 2.5 MMBbl/D Industry: Green River 2.5 MMBbl/d 17,000 Square Miles 52 Square Miles 17 Source: SPE #110590, 2007 Water Requirements • 1-3 Barrels of Water per Barrel of Shale Oil • Challenges: –Water rights –Ground water protection –Water runoff 18 Source: US DOE, 2007 Development Hurdles • Access to Land – 70% on Federal Land • RD & D • Environmental Permitting • Fiscal Regime 19 The Prize Total Resource 6 Trillion Barrels High Quality Resource 2 Trillion Barrels Technical Recovery 1 Trillion Barrels Reserves 600 – 750 Billion Bbls Source: INTEK, Inc., 2008 @ $50 - $65 / Bbl Production Potential (Shale Oil in the U.S.) Thousand Bbl/D 2,500 Accelerated Scenario 2,000 1,500 RD&D Measured Scenario 1,000 Business as Usual Tax Incentives 500 Base 0 2005 Source: US DOE, 2007 2010 2015 2020 2025 2030 2035 Year 21 Summary • Over 6 trillion barrels of in place resource • The most concentrated hydrocarbon deposits on Earth • Conversion technologies are advancing rapidly • Sustained production potential of up to 2.5 MMBbl/Day • Substantial economic benefits • Requires concerted effort by the private sector, governments, and local communities 22