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Alaska Shale Deposits


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Franklin Bluffs overlooking the Sagavanirktok River in northern Alaska about thirty miles south of Deadhorse is the site of a shale deposit being explored for possible development.

© Jim Barr / AlaskaStock.com

Alaskans know the National Petroleum Reserve-Alaska (NPR-A) as an important asset. The Greater Moose’s Tooth (GMT) development, operated by ConocoPhillips, is estimated to add 30,000 to 40,000 barrels per day into the Trans Alaska Pipeline System(TAPS). NPR-A was set aside by President Warren Harding in 1923. The increase is an important change to declining TAPS throughput, roughly a half million barrels of oil per day last year to an average 520,000 barrels per day today. A second project, GMT-2, further into the fringe of NPR-A, is still progressing and in the permitting stages. A third project, Willow, was announced in January as a light oil discovery with a possible 100,000 barrels per day.

Compared to the crude oil production reported in the US Energy Information Administration’s Annual Energy Outlook 2017, these new developments in NPR-A are small; 10 million barrels per day are expected to be produced in the United States in 2017—half from unconventional sources. In 2010, Alaska crude oil production equaled the unconventional oil produced in the United States and six years later the unconventional resource is out-producing Alaska by a factor of 10. The percentage is even more lopsided if discussing gas from unconventional sources.

The amount of oil or gas developed from unconventional sources in Alaska is nearly zero. It is as if Alaska was totally caught by surprise that oil could be produced in a manner other than drilling a conventional oil well. In Alaska history this is not true. Oil shale, one of the unconventional sources for crude oil, actually led to the formation of NPR-A.

 

Creation of Reserves

In 1910, the Pickett Act was passed and allowed the president to withdraw land in California and Wyoming for possible oil production for the US Navy. While President Harding set aside NPR-A in 1923, it is William Howard Taft, Harding’s predecessor, who both initiated the US government railroad in Alaska and created through executive order the Naval Petroleum and Oil Shale Reserves (NPOSR). Over a century ago, oil shale was being sheltered for the protection of the United States and projection of power through the US Navy warships. By 1923, petroleum and oil shale reserves in California, Wyoming, Colorado, Utah, and Alaska had been set aside under NPOSR.

Prior to becoming president, Taft was the 42nd Secretary of War, and later Harding nominated Taft to be the 10th Chief Justice (the only person to have led both the Executive and Judicial branches of the US government). The Secretary of War was third in line for succession to the presidency, if necessary, at a time when the president’s Cabinet would retain control of the Executive Branch of the US government, rather than pass to politicians of the Legislative Branch. Taft was also part of the Sherman Antitrust lawsuit that would break up Standard Oil into as many as thirty-two companies, including companies that later became Standard Oil of California, Standard Oil of Ohio (bought by BP), Chevron, ExxonMobil, and ConocoPhillips—all familiar names in Alaska.

It would be Standard Oil of California that would set the record for drilling to 5,034 feet, the then-deepest and most expensive well in Alaska in the years 1923-1926. Alaskans understand conventional oil development. Drill a hole down to a reservoir that has geologically trapped crude oil and deliver that pool of crude oil to the market. 

 

Oil Shale Is Different

Oil shale and its history are different. To understand how, one only needs to imagine an Alaska Native burning whale, seal, or fish oil, as well as other tallow for heat and light. In the 18th century, Alaska Natives were not the only ones using this oil for domestic use. Whale oil in particular was the fuel of choice for the 18th century households around the world due to its cleaner burning nature. That was until kerosene was derived from crude oil in 1849 and the world demanded more crude oil to make kerosene. While drilling for crude oil is traced back to the 4th century using bamboo rods with cutting bits, production drilling did not make an appearance until there was a commercial demand created by kerosene. The use of oil shale is 3,000 years older.

Before being reserved for US Navy ships by the Taft administration, oil shale was used for road construction, adhesives, medicine, and decoration back in the time of the Greeks and Romans. Oil shale could be found on the surface and then crushed and heated, with something that looked like crude oil eventually extracted. Using heat to speed the extraction process was called “retorting.” Oil shale was crushed and placed in a device to heat the rock and organic matter, and then the resulting emitted gasses were allowed to cool to form a liquid, which could be used to make kerosene.

Retorting went the way of the buggy whip when automobiles exceeded buggies, about the same time that Taft was creating NPOSR. The estimated entire US oil shale reserve was at more than 2 trillion barrels of oil at the time the NPOSR was created. 

Modern estimates put US oil shale reserves at 6 trillion barrels. Oil shale is known to occur in at least twenty-seven countries in the world and collectively adds more than 10 trillion barrels of crude oil to the world’s oil reserve. The United States has a majority of the resource. According to the Institute for Energy Research, “Depending on technology and economics, as much as 1 trillion barrels of oil equivalent could be recoverable from oil shale resources yielding greater than 25 gallons per ton. For reference, 1 trillion barrels is nearly 4 times the amount of proven oil reserves in Saudi Arabia.”

Of the 6 trillion barrels estimated in the United States, 4 trillion are concentrated in the Western states of Colorado, Utah, and Wyoming. In geologic history, these states were at several times at the ocean bottom for millions of years and in those periods would capture oil producing plankton and other organic matter amongst layers of fine particles of silt and clay. 

 

Oil Formation

In geology, a boulder or cobble sized rocks might be in the composition of the depositional ocean sediments. As these rocks were massive in comparison to their volume and that volume was used to displace water, these rocks fell swiftly as soon as the river or tidal current velocity dropped from miles per hour to yards per day. Sand sized particles also dropped quickly but could be carried further than a boulder. Particles smaller than sand are classified as silt and clay particles and may be carried far out into an ocean, sea, or lake before these particles come to rest. It is easy to visualize how oil bearing plankton and silt mixed with clay particles tend to settle in the same waters. 

Through geologic time, the silt and clay with plankton were buried and sank into the earth’s crust. The silt and clay became shale, and the layers of dead plankton became an organic compound named kerogen. Kerogen then may possibly transition into crude oil or gas. To transition, the formation must sink the layers of silt and clay deep enough for heat and pressure to have an effect, and then the kerogen either changes to crude oil or becomes a gas. Depending on depth, a geologic deposit either formed a gas shale, oil shale, or combinations thereof. Oil shales have more value than gas shales as crude oil contains more energy per volume than gas.

When Taft reserved federal oil shale lands, he probably did not make any distinction between oil shale, shale oil, or tight oil. In all likelihood, Taft was reserving federal property that might supply the Navy with oil. Modern distinctions are similar in that oil shale technically refers to rocks that need to be retorted to convert kerogen to crude oil, while shale oil is associated with crude oil trapped in shale, and tight oil is any crude oil trapped in a rock of low permeability such that the crude oil cannot flow. 

Alaska is looking for oil to fill TAPS just as the Navy was looking for oil to fill the ship’s hold. Oil shale probably means the same to Alaskans as it did to Taft. So the definition is changing and there are distinctions between various names, but most high level discussions focus on unconventional, tight, or continuous oil. 

 

Alaska Shale 

If 4 trillion of the 6 trillion barrels of the nation’s oil shale reserve is in the Western United States, is there an oil shale reserve in Alaska? 

Robert B. Blodgett, PhD, of Blodgett & Associates LLC, Geological & Paleontological Consultants, believes that there are significant potential sites. Blodgett says, “Other significant oil/gas shale plays that come to mind are the Devonian-Mississippian Ford Lake Shale of east-central Alaska, the Kamishak Formation [Upper Triassic] and Shelikof [Middle Jurassic] of the upper Alaska Peninsula, and the Shublik Formation [Upper Triassic] of the North Slope.” The Shelikof play is perhaps the source rock that produced the oil seeps that attracted Standard Oil of California to Alaska. Great Bear Petroleum has been investigating the Shublik Formation. 

A rich deposit of oil shale would be considered commercial if it contained forty to forty-five barrels of crude oil per ton of ore. This thinking is now old-school as it assumes the ore is near the surface and can be mined. The mined ore is crushed, retorted, and the return on investment is the resulting liquid. This method is employed around the world; but not in the United States. The United States instead is capturing oil shale liquids using fracking.

Water pressure is used to fracture the formation and proppant is left to hold the fractures open. This mixture of water and proppant is injected into an oil-rich shale formation and allows the oil to be released to flow back to the surface. Fracking has eliminated the on surface crushing and retorting. Alaska is well acquainted with this fracking.

Almost 1,900 wells, about one fourth of the wells drilled in Alaska, have been fracked, according to Cathy Foerster, chair of the Alaska Oil and Gas Conservation Commission. This is the game changer for the United States oil supply as this process has produced significant oil in other states.

The federal Energy Information Administration in November of 2016 reported United States tight oil production at approximately 4 million barrels of oil per day—a large percentage when compared to the its report in the same month of 8.681 million barrels of total production in the United States. 

 

Exploiting Oil Shale

Alaska’s tight oil, shale oil, or oil shale production is virtually non-existent. Blodgett believes there are significant oil shale plays and has a theory why they are not exploited. “Petroleum exploration has come to rely more heavily upon seismic [geophysical] data in recent years; however, for successful results in the hunt for oil shale deposits, traditional data such as biostratigraphy [paleontological], sedimentology, and stratigraphy are also absolutely necessary. I have seen some major pitfalls in Alaska, notably in Cook Inlet, where serious errors have been made when one relies wholly upon seismic interpretation.”

The Department of Energy would agree with this statement, listing subsurface science as one of its six foci for research and development. Their list includes subsurface science, footprint reduction, induced seismicity, methane emissions, transportation and storage, and water quality and availability. Footprint reduction is necessary as fractured oil wells must be spread over the width and breadth of the formation. A conventional well may collect oil from a central point. 

In North Dakota, for example, there are roads spread over many pasture lands, but Alaska does not possess that kind of infrastructure. Induced seismicity is a consideration in an area without reinjection of produced fluids; but on the North Slope, produced water is not only reinjected but supplemented with millions of barrels of seawater. Methane emissions, transportation, and storage are Alaska sized problems, but not unique to oil shale. Hydraulically fracturing an oil shale formation does have both a water quality and availability problem. Much of the national attention on oil shale hydrocarbon production focuses on water quality, but in Alaska the problem is water availability.

In a shallow formation, like the Marcellus Shale in the Eastern United States, the oil shale is close to the reservoirs that provide water resources to the surface environment. Fracturing the shale may provide a vector for pollutants. In Alaska, we do not currently have any shallow formations. Case in point, BlueCrest is fracturing a long horizontal well near Anchor Point, in Southcentral, and the fractures going several hundred feet from the well will not be able to penetrate the more than 7,000 feet the formation is under the Cook Inlet.

 

Water Is a Problem

Water availability is a real problem. The Department of Energy has completed a number of studies that recognize that water is an essential component of the North Slope environment, which influences natural life cycles, essential habitat, and is meeting a variety of human needs. A single fracking processing may require as much as 500,000 gallons per fracture. By contrast, the Bureau of Land Management has estimated that a single mile of ice road requires 1 million to 1.5 million gallons of water per mile. In the frozen Arctic, the water from area lakes to supply the ice roads alone has become a central regulatory management problem. There may be a reason Alaska does not contribute to the national production of tight oil production—economics. 

Coal looks like a rock but depending upon the richness of the carbon content may yield between 8,000 Btu per pound and 17,000 Btu per pound. Lignite coal is generally a low grade coal and anthracite coal, the metamorphic rock that has been condensed through heat and earth pressure. Anthracite is the higher end of the valued fuels and is rare. There is already a grading system for coal, from lowest to highest; peat, lignite, subbituminous, bituminous, and anthracite. It is based upon the amount of energy derived per pound. Oil shale has a similar value system. 

Oil shale rankings are based upon the richness and quality of the ore body. Richness is simply a measure of how much oil can be extracted from a ton of ore. A rich ore may contain more than forty gallons of oil per ton of oil shale. Less than twenty gallons of oil per ton of rock is considered poor. Converting to Btu’s per pound of oil shale allows the comparison to coal. At twenty gallons of high quality crude oil in the ore, a poor ore of high quality might have 1,380 Btu per pound and a rich ore of high quality would be double. This is no match for coal by a factor of 5 to 15. So why would Taft create an oil shale reserve?

Navy ships displace water to stay afloat and the weight of the fuel controls both the ship tonnage and effective range. A ton of coal, depending on quality, may deliver 12 million to 24 million Btu but a similar ton of heavy fuel oil would provide 35 million Btu. The Navy ship could range farther or could use tonnage for other important factors such as armor or firepower. 

A century ago, the nation reserved oil shale, the ancient rock that produced promise of crude oil to power Navy ships and the United States should the need exist. Oil shale and the NPOSR did not survive as conventional oil drilling methods produced cheaper means of providing large quantities of crude oil. At the same time, Alaska is missing from the future power curve driving America’s oil production: that which might be derived from Alaska’s oil shale reserve.    

This article first appeared in the April 2017 print edition of Alaska Business Monthly.

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