Scientists Seek Money to Cook Oil From Rock

Past efforts extracted red ink, but Illinois researchers use new method. SHALE OIL REDUX

SHALE oil may yet have its day in the gas tank. Last month, even as the nation's premier shale oil project was suspended because of cost, scientists from Chicago were visiting Washington to promote a cheaper approach. And they will present the process at an annual shale oil conference to be held tomorrow and Wednesday in Golden, Colo.

"People there will be quite depressed because of the closing of the conventional process," says Jack Bridges, senior scientific adviser at the Illinois Institute of Technology's Research Institute (IITRI).

Scientists at IITRI hope to persuade the Department of Energy (DOE) and major oil companies to spend a relatively modest $10 million on a demonstration project at the Parachute Creek, Colo., site of Unocal Corporation's failed $650 million effort.

The DOE has not requested any funds for shale oil technology development in its next budget. The budget is now with Congress, which might add some funding. "Many of the people [in government] are basically interested in balancing the energy policy with some activity in the shale area," Mr. Bridges says.

At stake is a domestic energy resource 24 times larger than United States reserves of conventional crude oil. Shale deposits in the western US contain an estimated 600 billion barrels of shale oil, which can be turned into high-quality synthetic crude oil.

But extracting shale oil isn't easy, as Unocal found out. The Los Angeles-based oil company had worked since 1980 on the Parachute Creek project.

Unocal's method was to dig up the shale, crush it, and feed it into a machine called a retort. There it was heated to 1,100 degrees F., yielding about 1 barrel of shale oil per 1.3 tons of shale. Hydrogen was added to turn the oil into "syncrude."

But technical glitches in the retort prevented Unocal from sustaining the intended rate of 10,000 barrels per day. Production peaked at 7,000 b.p.d., driving up unit costs. For each barrel of syncrude produced last year, Unocal received an average sales price of $24.17 plus a federal subsidy of $25.60. It still lost $4.66 per barrel, leading the company to announce it will pull Parachute Creek's plug on June 1.

Unocal's failure has fueled skepticism about the economic viability of shale oil. But it also may clear the way for consideration of a different approach that IITRI perfected in 1985 after a decade of work.

IITRI's process would leave the shale in place. Shortwave antennas lowered into wells drilled in the shale formation would act like a microwave oven, "except that it heats evenly," says Bridges, who is an electronics engineer specializing in high-level electromagnetic effects. The shortwaves would heat the rock to 700 degrees F., causing oil to flow into the wells where the antennas are.

An evaluation of the technology performed in 1985 by Bechtel Corporation, the San Francisco engineering firm, found that three barrels of oil would be produced for every barrel consumed by the plant generating the shortwave energy.

Compared to the Unocal process, an IITRI shale project would need half as large a work force, use a quarter of the water, emit a fifth as much carbon dioxide, and have no on-site combustion, Bechtel found.

Because of its water use and air emissions, Unocal's process could never be scaled up beyond 1 million b.p.d., limiting its ability to offset oil imports, Bridges says. IITRI's technology, in contrast, would allow production of 4 million b.p.d., he says. The US imported 5.5 million b.p.d. of oil during the four weeks ended April 12.

Bechtel's 1985 study concluded that IITRI's process could produce shale oil for $25 to $35 per barrel. When the Gulf crisis started, IITRI scientists reworked the calculations using a much more efficient power plant and current, much lower natural gas prices. "We were able to get it in the $20 range," says Bridges. Of course, he adds, "until you actually take this up to the semi-commercial stage, it's basically a projected price."

If he's correct, though, the shortwave technology borders on commercial viability. Crude oil costs more than $19 per barrel in the US.

So why has the technology sat on a shelf for five years? Timing, Bridges answers.

The price of oil collapsed in 1986. Most oil companies were too preoccupied with survival to consider investing in unproven alternative technology. Bridges recalls pitching the shortwave process to an assembly of executives at a Denver oil company. Throughout his presentation, a secretary kept entering the darkened room and tapping people, who would promptly exit. When the lights came up, only two employees were left - the survivors of that day's layoffs.

Bridges recently telephoned an executive at a major oil company and asked if he was the head of the shale oil development department. "I am the department," the executive answered.

The few companies still interested in shale had invested heavily in other approaches for years and wouldn't look at IITRI's method, Bridges adds.

Occidental Petroleum was a near miss. When Robert Abboud was its president, he instructed the Los Angeles-based independent oil company to consider the shortwave process along with a competing type. But Mr. Abboud departed before Bechtel's study was complete. Oxy focused on developing the competing process with partial funding from the DOE. That project ended in December when Oxy dropped out.

Meanwhile, IITRI has adapted its process to other purposes. Oil companies are using it to triple the flow from wells drilled into deposits of heavy oil.

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