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The Oil Market


Non-conventional oil and gas

Non-conventional fossil fuels have experienced a strong upswing during recent years, in particular shale oil and shale gas, especially in USA where the increase in their production had very strong impact on the energy industry in USA with far reaching repercussions on the global energy/oil markets. Shale oil and Shale gas are not the only non-conventional fossil ,there several others

The increases in oil and energy prices since the beginning of the past century together with the increasing demand and thanks to the improvement of new technologies all contributed towards increasing the exploration and production of non-conventional fossil fuels.

The main difference between “conventional” and “Non-conventional” oil and gas is the method and the cost associated with extracting this fuel resource and v their geologic location and accessibility. It is also worth mentioning that the extraction of non-conventional fossil fuels requires state of the art technology which is complex and costly. While the production of conventional fossil fuels the old classical extraction methods

There is no hard and fast line to be drawn between non-conventional and conventional fossil fuels ,but one can assume that all oil and gas reserves/resources that can be extracted by non-conventional technology is to be called non-conventional.

Sometimes ultra-deepwater and reserves in the Arctic Region are also included under non-conventional fossil fuels. In this article the definition given by the renowned German Federal Institute for Geosciences and Natural Resources (BGR) is used.

The following chapter includes a brief summary concerning the non-conventional fossil fuels, indicating the particularities, such as geographical location, environmental impact, technological requirements and cost involved.

With regard to reserves , the share of conventional oil and gas is 87% compared to only 13% for the non-conventional oil and gas. However concerning resources , the share of non-conventional fossil fuels is significantly higher than conventional fossil fuels, indicating that in future with progressing technologies and given the right price environment, the life-span of non-conventional fossil fuels can be increased considerably.

Currently the major part of non-conventional fossil fuels is produced in North- and South America: tar sand in Canada, extra-heavy oil in Venezuela, shale oil and shale gas and tight gas in den U.S. and in small quantities also in Canada. But several other countries have significant amounts of non-conventional reserves and resources, in some (e.g. Argentina, Australia) of them production just started, while in others the production is still in the exploratory phase.

Oil Sand

Oil sand is a naturally occurring mixture of sand, clay or other minerals, water and bitumen, which is a heavy and extremely viscous oil that must be treated before using it by refineries to produce products such as gasoline and diesel. Bitumen must be upgraded to synthetic crude oil before it can be processed in a refinery. Known oil sand deposits can be found in 23 countries, including the United States, Russia and Venezuela, but the Athabasca deposit in Alberta Canada is by far the largest, accounting for over 70% of worldwide oil sand deposits. Two tons of oil sand produce one barrel of synthetic crude oil . The Canadian oil sand industry is the most developed and utilizes the most technologically advanced production processes.

Since oil sand is highly viscous and semisolid it cannot be extracted by using traditional oil extraction techniques. Thus, it can be extracted by mining, whereby the overburden is removed, and the oil sand extracted in a similar manner to the extraction of coal from a mine. Alternatively, the oil can also be extracted with in-situ (latin for “in place”)

methods using steam injection to change the properties of the bitumen. On average two tons of oil sand produce one barrel of synthetic crude oil .

The worldwide largest oil sand deposits are found in Canada, in the Athabasca region of Alberta, whereby the mining region extends over an area of approximately 140.000 km2, which corresponds to the double surface of Ireland. Producing synthetic oil from oil sands is very controversial, since the environmental impact is considerable. The high energy intensity of the extraction process causes high CO2 and methane emissions. The mining process leads to an enormous consumption of land, which will then be left devastated and poisoned. Moreover the extraction technology is requiring a lot of precious water.

Extra-heavy oil is that portion of heavy oil having an API gravity of less than 10° and has a high viscosity. Extra heavy oil is similar to oil sands, however it is les viscous and easier and less costly to extract than oil sands. It is also less harmful for the environment than oil sands. The largest extra-heavy oil accumulation is the Venezuelan Orinoco heavy-oil belt, which contains 90 percent of the world's extra-heavy oil when measured on an in-place basis. The beginning of extra heavy oil production in the Orinoco Belt dates back to the 1980s. To process the extra heavy oil so called “upgraders” are necessary to process the extra heavy oil and to make it suitable for further processing in refineries. To make it more fluid and thus more suitable for being processed in a refinery, extra heavy oil is often mixed with naphtha or other light products. Following the discovery and development of the extra heavy oil reserves, Venezuela became the country with the largest oil reserves worldwide. Small quantities of extra heavy oil deposits are also found in other countries, such as in China, Azerbaijan und the UK. .

Shale oil and shale gas

Conventional gas and oil is accumulated in medium to highly porous reservoirs with sufficient permeability to allow gas or oil to flow to a producing well (natural flow). Conventional gas and oil resources can be developed and produced without any special well completions and they are relatively easy to extract, as they will naturally flow out of the reservoir when a well is drilled. Shale oil and shale gas occur in relatively impermeable rock formations, shale-tight sands. Unlike traditional reservoirs, shale is a low-porosity rock from which oil and gas will not flow freely. To get the oil and gas out of the ground, artificial pathways (fractures) have to be created by extensively using horizontal drilling and fracturing (or fracking) techniques. A much better knowledge of the geologic formation is necessary and a much higher number of extraction points are required. These special techniques made drilling for unconventional gas uneconomical for many years. The extraction of shale oil and shale gas became feasible through the combination of horizontal drilling and hydro fracturing (fracking). .

Currently the U.S. and Canada are producing shale gas and shale oil in large quantities, while China, Argentina, Australia, UK and a few other countries are in the exploratory stage or are production minor quantities. There are large shale gas and shale oil deposits worldwide. The technology of fracking is not without controversy, since critics fear that the groundwater will be contaminated. It remains to be seen whether shale gas and shale oil will be as successful outside the US and Canada. Most large oil and gas companies are engaged in the shale gas and shale oil exploration and production. .

Tight Gas

Tight gas is found trapped in impermeable rock and non-porous sandstone or limestone formations, typically at depths greater than 10,000 feet below the surface . It is extracted by using the „fracking“ technology. Since tight gas deposits are located much deeper than shale gas, the risk for contamination of the groundwater is much less. Oil shale is a sedimentary rock that holds deposits of organic compounds called kerogen. It has not yet undergone enough geologic pressure, heat and time to become conventional oil. Oil shale deposits can be found in more than 40 countries, with the US holding around three quarters of the global oil shale resources.. Aus Ölschiefer wird durch thermische Behandlung sogenanntes Schieferöl gewonnen. Die Gewinnung ist extrem aufwendig und energieintensiv. Ölschiefer wird seit mehr als 160 Jahren in einigen Ländern in geringen Mengen abgebaut und verarbeitet, Heute wird nur noch in Estland, im Leningrader Becken, in Südchina und Brasilien Ölschiefer gefördert. Experten gehen davon aus, dass noch eine längere Entwicklungszeit notwendig ist, bis eine kosten- und vor allem energieeffiziente Produktionsmethode entwickelt wird.



methane (CBM), coal seam gas (CSG), or coal-mine methane (CMM) are forms of natural gas extracted from coal beds prior to mining taking place. “Methane from un-mined coal seams is recovered through drainage systems constructed by drilling a series of vertical or horizontal wells directly into the seam. Water must first be drawn from the coal seam in order to reduce pressure and release the methane from its adsorbed state on the surface of the coal and the surrounding rock strata. Once dewatering has taken place and the pressure has been reduced, the released methane can escape more easily to the surface via the wells” .

In recent decades has become an important source of energy in several countries. With approximately 80% of the worldwide coal.bed methan production is the U.S. the top producer, but also, Canada, China, Germany and Australia are producing coalbed methane. While the global production of coalbed methan is still low, a growing trend can be observed. CBM production poses environmental challenges: the extraction process leads to immense groundwater depletion. In some cases hydro-fracturing is used to extract CBM, a process where chemicals are used which may contaminate domestic, agricultural, and industrial water supplies.

Gas hydrates

are solid (ice-like) molecular compounds consisting of gas and water which are stable under high pressures and low temperatures. Gas hydrates are crystalline solids in which gas molecules are encased in cages of water molecules. The solid is similar to ice except that it burns! Methane hydrates are found primarily in two types of cold environments, deep in the ocean in deep water continental margins and beneath the permafrost in arctic regions . Enormous deposits of gas hydrates have been discovered in nearly all oceans and in the permafrost regions. However to date no technology has been developed to extract gas from gas hydrates. Since the 1970s researchers in the U.S. Canada, Japan, and China and in other countries are engaged in research concerning gas hydrates and their potential future use. If and when the needed technologies to extract methan from gas hydrates will be developed remains to be seen. Also the possible consequences for the ecosystem on the seabed are not yet known.

Aquifer gas

Aquifer gas is natural gas dissolved gas dissolved in deepwater fields. Aquifer gas is formed in very deep groundwater strata. Although there are huge deposits of aquifer gas worldwide, the recovery of aquifer gas has so far proved uneconomical.