Unconventional oil market assessment: ex situ oil shale

This thesis focused on exploring the economic limitations for the development of western oil shale. The analysis was developed by scaling a known process and simulating in ProMax some of the chemical processes implicated in the production of oil shale, obtaining the capital and operating costs to develop these processes and performing an economic evaluation. The final results are a detailed breakdown of the components of the supply cost of syn crude produced. Two technologies were considered in this project: air-fired combustors and oxyfired combustors with a CO2 capture course of action. Additionally, in each of the scenarios, a sensitivity analysis was performed based on the resource quality and the taxation of CO2 emissions for the air-fired combustion and the price of CO2 for oxy-fired combustion. This project revealed that the total capital invested to develop oil shale projects is gargantuan: a total depreciable capital cost of $3.34 and $3.39 billion for the air and oxyfired case, respectively, for a shale quality of 25 gal/ton. It was shown that the geological resource significantly impacts the cost of production. For different shale grades of 20, 25 and 35 gal/ton, the supply cost varied from $124/bbl, $112/bbl and $97/bbl, respectively. Moreover, this analysis showed that the oil shale project profitability is highly dependent on governmental policies. The potential taxation of CO2 increased the supply cost by 1.75%; the air-base case was $112/bbl and with CO2 taxation increased to $120/bbl. From these results, it can be concluded that oil shale projects have higher technical, economic and government policy risks which limit their use by industry. For more projects to move forward, these risks must be lowered. It also is clear from the supply cost analysis that royalties are a major component as are taxes and interest charges.