Navigant Research Blog

A Better Way to Extract Shale Oil

Taylor Embury — November 5, 2014

Last month the Colorado Fuel Cell Center (CFCC) at the Colorado School of Mines hosted the first public demonstration of IEP Technology’s Geothermic Fuel Cell (GFC).  This innovative technology uses the waste heat produced by fuel cells to convert the kerogen in oil shale into unconventional hydrocarbons onsite.

Using standard fuel cell technology, the GFC flips the application on its head by taking a heat-first, power-second approach.  The system uses solid-oxide fuel cells, manufactured by Delphi Automotive, in tubular modules that can be linked end-to-end to create a long string of fuel cells encased in a steel cylinder.  The long-term plan is to insert vertical stacks that are up to 1,000 feet long into oil shale formations, spaced 10 to 15 feet apart in a grid pattern.  In this configuration, the fuel cells can generate temperatures of up to 1,200°F, which will be used to heat the formation and drive pyrolysis (thermal decomposition of the oil shale).

Giving Shale Oil a Better Name

Currently, shale oil is most commonly extracted ex situ, or offsite.  The oil shale is mined and taken to an above-ground processing facility where it is crushed, heated to temperatures suitable for pyrolysis (500-1,100°F), and the unconventional hydrocarbons (shale oil and natural gas) are collected, cooled, and refined.  This process is expensive, inefficient, and extremely damaging to the environment, and it has earned shale oil extraction a bad name.

IEP’s technology, on the other hand, performs the processing in situ, or onsite, by applying heat underground and extracting the shale oil and natural gas via wells that sit among the boreholes, leaving the formation intact.  The only byproducts are electricity that can be sold back to the grid, small amounts of clean water, and CO2.  It may seem odd to think of the electricity as a byproduct, but that’s the beauty of IEP’s approach.  If a single 1,000-foot stack contains 100 to 300 of Delphi’s 1.5 kW fuel cells, you’re talking 150 kW to 450 kW of baseload power per stack over a projected 5-year lifespan, which is no small thing when you consider the potential revenue.

IEP estimates that the gross capital and operating costs of a GFC installation will be less than $30 per barrel of shale oil when the revenue from the sale of electricity and surplus gases is taken into consideration.  This would give GFCs a significant cost advantage over the competition.  More significantly, IEP’s technology allegedly has an energy return on energy invested (EROEI) of 22:1, which would be a monumental improvement on the current best-in-class EROEI for oil shale, which is closer to 5:1.  The technology seems easy enough to replicate, but IEP has patented its idea, which should give it some protection from competitors.

The Real Cost

However, a couple of questions come to mind.  First, what will the actual installed cost of the systems be?  It could take thousands of fuel cells to develop a single formation.

Second, you have to run a fuel source out to the site, which is probably fairly remote, in order to run the GFC.  You also have to run transmission lines out to the site and build a substation in order to sell power back to the grid, and the fuel cells will only be running at that site for 5 years, so it’s a temporary installation.  How many utilities would be interested in doing that?  These questions must be addressed, and we won’t know how the economics and EROEI shake out until mid-2015, when the GFC is expected to be field-tested.  But this appears to be a very promising technology.

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