Water Requirements for Oil Shale 1960-1975 July 1959

WATER REQUIREMENTS

FOR OIL SHALE

1960 - 1975

A Study for the

COLORADO WATER CONSERVATION BOARD

Cameron and Jones Incorporated

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CAMERON AND JONES, INCORPORATED ENGINEERS-CONSULTANTS

.KY'-llfl 7•ta•t CA.UI: CAM.ION TWX DN 888

21150 .OUTH BKLLAIRE STRUT, DI!NVER aa, COLORADO

Colorado Water Conservation Board 212 State Office Building

Denver 2, Colorado

Gentlemen:

July 1, 1959

As directed by our contract dated May l, 1959, we have made a study of the water requirements for an oil shale in-dustry in western Colorado. our report includes estimates of shale oil production rates through the year 1975 and associated water usage for both municipal and industrial purposes. Extension of these estimates past-1975 was not

thought justifiable on account of the embryonic status of Colorado's oil shale industry.

Prom considerations of the United States petroleum supply and demand and the unquestioned status of oil shale as our !'fiOSt feasible domestic petroleum supplement, we con-clude that commercial shale oil production may begin during the period 1960-1965. Prom an initial production of about 25,000 barrels per day, shale oil output should increase to l,250,0QO barrels daily by 1975. The industry should con-tinue its expansion beyond this period.

We recommend planning a water supply capability for

shale oil production and its related municipal and industrial development corresponding to the following scheduleJ

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1960 1965 1970 1975

Acre feet per year 2,000

5,000 40,000 250,000

A~though _,· we believe these figures to be as reliable as possible today, it should be recognized that new technological developments in shale oil production and utilization are to

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~olorado water Conservation Board July 1, 1959

pe expected. Furthermore, the industry could develop more rapidly if access to foreign oil were adversely affected or less rapidly if federal restrictions on oil importation are relaxed. Changes in the tax status of the petroleum industry ~lso could strongly influence the attractiveness of shale oil. In view of the several factors which could change basic assumptions of this study, periodic reviews of the shale

water situation until the industry development pattern is firmly established are suggested.

We wish to acknowledge the cooperation and advice of Director F.L. Sparks, of Shale Water Committee Chairman William H. Nelson, and members of the Committee. We

especially wish to extend appreciation to the oil company officials who gave us the benefit of their viewpoints on various parts of the study.

RJC:jh

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WATER REQUIREMENTS FOR OIL SHALE

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1960 - 1975

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_{COLORADO WATER CONSERVATION OOARD} A Study for the

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Cameron By and Jones

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EngineersIncorporated ·- Consultants Denver, Colorado

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July, 1959

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TABLE OF CONTENTS LETTER OF TRANSMITTAL.

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SUMMARY • • • • •

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INTRODUCTION •

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ESTIMATE OF PETROLEUM SUPPLY AND DEMAND

THROUGH 197 5 • • • • • • • • • •

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INFORMATION ON OIL SHALE • • • • • • • • • • • . • • • •

Oil Shale Reserves . • • . • • . • • • • • • • • ••

Historical Sketch . • • • • • • • • . • • • • . Current World Picture • • • • • • . • • • • • • • • Recent Oil Shale Activities in the U. S. . •• •• Economics . • • • • . • • . • • • • • • • • • • • • vfuy No U. S. Shale Oil Production?. • • • • • • Growth of the Shale Industry After 1975 • • • . • • OIL SHALE INDUSTRY DEVELOPMENT PATTERN • • • • • • •

Phase I - Experimental. • • • • • • . • • • • • Phase II - Prototype • . • • • • • • • • • • • • • • Phase III - Primary Expansion • • • • . • • • • • • Phase IV - Secondary Expansion. • . • •• • • •

\~TATER REQUIREMEN1S FOR SHALE OIL PRODUCTION.

Water Requirement for Phase I • • • • • • • Water Requirement for Phase II • . . • • • • • •

Water Requirement for Phase III • • • •

Water Requirement for Phase IV • . • • . • . • .

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TABLES Page 1. \'IORLD SHALE 0 IL RESERVES • • •

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2. PETROLEUM RESERVE ESTIMATES. • • • • • • • • • • • • 10

3. SUMMARY OF WATER USE DATA FOR COMMERCIAL

OIL SHALE DEVELOPMENT • • • • • • • • • • • • • • • • 33

4. SUMMARY OF POPULATION FOR COMMERCIAL

OIL SHALE DEVELOPMENT. • • • • • • • • • _• • • • • • 34

FIGURES

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SUMMARY

MOst authorities agree that shale oil will be needed

in the fairly near future to supplement domestic petroleum.

The principal deposits of oil shale in the United States are in western Colorado and the water used by the industry will be taken from the Colorado River and its tributaries.

It is of vital importance that the development of an

adequate water supply system for an oil shale industry not

be neglected.

The purpose of this study is to determine the water needs of a shale oil industry in the United States from its inception through the initial period of growth. This

report also attempts to establish approximately vrhert

commercial shale oil production will begin and the rate at which it will grow thus providing a timetable for planning adequate water supplies for the industry.

Production Schedule

Shale oil production in the United States is expected to begin during the period 1960-1965 and increase steadily to about 1,250,000 barrels per day by 1975. Estimates of oil demand and the sources from which we will obtain our supply for the period 1960-1975 are given in the tabulation

below.

Demand

Domestic Imports,

Shale Oil

UNITED STATES OIL DEMAND AND SUPPLY Millions of Barrels Daily

1960 1965 1970 10.0 12.0 14.0 Production· 8.3 9.2 9.4 Synthetics, etc. 1.7 2.8 4.5 0.025 0.15 -1 -1975 16.0 8.8 6.0 1.25

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The expansion of shale oil production should continue after 1975, ultimately reaching several million barrels per day. It must not be implied that 1,250,000 B/D is the maximum production rate the industry will attain.

Water Requirements

Water requirements for shale oil production will be small until 1970, but will reach about 250, 000 acre-feet per year by 1975. The tabulation below presents estimated water usage attributable to shale oil production, includ -ing municipal use. A recommended minimum firm water sup -ply capability for shale through 1975 also is given.

Diverted Returned Consumed

0 IL SHALE WATER REQUIREMEN'IS Acre-feet per year

1960 1965 Negligible 1300 550 750 1970 27,000 11,000 16,000 1975 252,000 93;000 159,000 Supply Capability 2500 5000 40,000 250,000 Development Pattern

Because of the time needed to design and build the first production facility,· it is doubtful 'that a shale industry can begin much earlier than predicted. A delay is possible, however, in the event that petroleum continues to be available in ample supply. Even so, we believe the development pattern of the industry, once started, will be

the same - first, prototype production followed by moderate expansion and finally, significant production quantities.

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The time required for this sequence, in the absence of a national emergency, will be 12 to 15 years.

Location

It is anticipated that the first oil shale develop-ments will be in the Parachute-Roan Creek area of western Colorado and along the Colorado River between Rifle and

Debeque. After 1970 the oil shales in the Piceance Creek area and in Uintah County, Utah, will become important. Some development in these latter areas could begin earlier.

It is estimated that of the 1,250,000 barrels per day of shale oil production predicted for 1975 over 90% will be in Colorado.

Population

The population serving the shale industry will be large by 1975. The tabulation below gives estimates of persons directly or indirectly related to the shale

indus-try.

SHALE INDUSTRY POPULATION

1960 ~965 1970 1975 Shale employees

Construction force, Average Service personnel ·100 ·900 6,900 51,000* 1,200 3,ooo· 1s,ooo 360 7;100 53,500 New households 630 12;500 93,000 New population 2,300 45,000 340,000

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Includes shale related industries. By-products

The principal by-products of shale processing for outside consumption will be ammonia, sulfur and coke.

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Petrochemicals will not be important during the first

15 or 20 years of the industry. Retort and refinery

gases will be consumed by the industry for fuel and power generation. After 1970 the manufacture of explosives, sulfuric acid, cement and other materials consumed by the

industry and its community will begin.

Investment

The investment in mines, retorting plants, refineries and pipelines through 1975 will exceed $6 billion. This magnitude of investment is well within the capabilities of

the petroleum industry. An additional investment of un-determined magnitude will be made in housing, service

facilities and other improvements. These expenditures may exceed that for production facilities.

Current Status of U. S. Oil Shale

During the past 15 years, government and industry have spent perhaps $50 million on research, land acquisition and other activities preparatory to starting a shale industry. Efficient, economic processes now are available for each

phase in the production and refining of shale oil. Shale

products can be manufactured which are equivalent in every way to those from petroleum.

Presently, shale oil awaits a market. Both U. S. and foreign petroleum producing areas have excess capacity. This oil can be obtained at little or no additional

invest-ment. Shale oil, technologically and economically, is ready for development when domestic fields are being produced at

maximum practical rates and there is protection from

competi-tion by imported oil.

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WATER REQUIREMENTS

FOR OIL SHALE

1960 - 1975

INTRODUCTION

The first step in this study was to attempt to

establish the date when commercial shale oil production

will start. This was done by a study of recent petroleum

supply and demand forecasts by experts in this field.

Next, a pattern of industry growth l'Tas worked out

taking into account the present status of the technology,

the forecasted gap between domestic production and demand

for oil, the comparative economics of shale oil and petr

o-leum, the remoteness and industrial under-development of

the oil shale areas, and other factors. Engineering

esti-mates of water requirements both for municipal and industrial

use were made for each investment of shale oil production.

The result is a first approximation of a time schedule

for water supply planning for oil shale. This study will

require periodic review. Once commercial shale oil pr

o-duction begins and as new technology emerges it is likely

that revisions will be necessary.

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ESTIMATE OF PETROLEUM SUPPLY AND DEMAND THROUGH 1975 Future petroleum demand and availability is a subject of continuing study by oil company economists, government

agencies, and others (5)(11)(13)(14)(25)(26)(48). Current-ly, several estimates are published each year by experts in this field. From a study of the most recent estimates,

and consultation with the authors, we have derived a con

-census prediction of petroleum demand and domestic

petro-leum production through the year 1975. Our demand and production estimate is presented in Figure 1.

It is the conclusion of the experts that petroleum

demand in the United States will continue to increase for

the next 15 to 20 years. The rate of increase will be slightly less than that of the past 10 years, but will

reach a level of 16,000,000 barrels per day in 1975.

Domestic petroleum demand in 1958 was 9,313,000 barrels per day (38).

Petroleum product ion in the United States has shown a

steady increase, but has not kept pace with demand. It is predicted that production \'Till continue t<;> increase until

the period 1965 to 1970, then begin a gradual decline. The

reason for this decline will not necessarily be that the industry cannot find more oil, but that the cost of

alter-nate sources, such as shale oil, will be less than the

cost of finding new and replacement petroleum.

The gap between demand and production since 1948 has

been filled by imports and this practice probably can be

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.Jl. F'IGURE

USA PETROLEUM SUPPLY AND DEMAND

1050-1075

MILLIONS 0' IAIUtEI.I PElt OAY

Yt&• •n~o~cu .. OOitUTIC t .... POttT' IHALl

DlWANO •AOOUCTIOH [TC. _~

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ltiO 10.0 1.3 1.1 ltiS lt.O t.l Z.l o.oz~ • .,o 14.0 ••• 4.5 O.LSO lt71 16.0 ••• 1.0 I.UO DOMESTIC PRODUCTION 1111 -7-10

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followed through 1965 without our becoming overly dependent

on overseas oil. However, when production levels off,

then begins to decline, the deficit between production and

demand will increase at more than twice the present rate,

reaching about 7,000,000 barrels per day by 1975.

It seems reasonable that shale oil production to

sup-ply a part of this large deficit will begin between 1965

and 1970. A pioneer production unit to establish the

technology on a commercial basis probably will be built

prior to this time. Assuming a logical pattern of

develop-ment for the shale industry, unaffected by war or other

emergencies, shale oil production should reach about

1,250,000 barrels per day by 1975.

INFORMATION ON OIL SHALE

Oil Shale Reserves

Shale oil has long been looked upon in the United

States and elsewhere as the logical supplement to

petro-leum. Oil Shale reserves are large and widely distributed.

The shale oil potential of the United States exceeds the

combined petroleum reserves of the Middle East and

Vene-zuela and is many times greater than the most optimistic

prediction of ultimate petroleum discoveries in the United

States. Without question, shale oil, when needed, can

contribute significantly to our energy supply.

Svenska Skifferolje AB, the Swedish Shale Oil Company,

has roughtly estimated the world's oil reserves in shale {18).

Table 1 gives their estimates by country in which oil shale

is known to occur.

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TABLE 1

WORLD SHALE OIL RESERVES

Oil Content Country

Australia and Tasmania Belgian Congo

Brazil Bulgaria

Burma and Thailand Canada China England Estonia France Germany Italy Madagascar Manchuria Russia Scotland South Africa Spain Sweden United States Yugoslavia Metric tons 30,000,000 15,000,000,000 50,000,000,000 30,000,000 2,500,000,000 5,000,000,000 400,000,000 200,000,000 1,500,000,000 200,000,000 300,000,000 5,000,000,000 30,000,000 30,000,000 1,000,000,000 90,000,000 5,000,000 40,000,000 410,000,000 90,000,000,000 200,000,000 Barrels 200,000,000 103,000,000,000 344,000,000,000 200,000,000 17,200,000,000 34,000,000,000 2,800,000,000 1,400,000,000 10,300,000,000 1,400,000,000 2,000,000,000 34,000,000,000 200,000,000 200,000,000 6,900,000,000 600,000,000 40,000,000 300,000,000 2,800,000,000 618,300,000,000 1,400,000,000

TO'l'AL RESERVES about 172,000,000,000 1,200,000,000,000 Source: Svenska Skifferolje AB

'rhe estimates by Svenska Skifferolje are very

conserva-tive since many of the larger deposits have been

inadequate-ly surveyed. As more information becomes available, these reserves will increase. For instance, United States

reserves alone now are estimated at 1.5 trillion barrels or

about 200 billion metric tons (19) . It seems within reason

that the world's recoverable shale oil reserves may

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ultimately prove to be in excess o.f 500 billion metric

tons or over 4 trillion barrels.

For comparison, the table below gives recent petro -leum reserve estimates for the United States and for the

world as a whole.

TABLE 2

PETROLEUM RESERVE ESTIMATES Billions of barrels

U.S.A. World

Proved Reserves, 1959

Ultimate Future Production

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200-250

275 900 Source: Oil and Gas Journal (38), Chase Manhattan Bank (11)

Wallace Pratt (41) . Historical Sketch

Throughout the world, shale oil has been produced when petroleum has been scarce or expensive. In fact,

shale oil predates the discovery of petroleum and shale

industries have operated in Europe for more than 100 years.

For the past 50 years or so, owing to the abundance of low-cost petroleum, shale oil has been relatively unimportant except in special circumstances. However, during \tlorld \var II, shale oil supplied critically needed fuels for Japan, Sweden, Austrailia, and other countries cut off from their normal source of oil.

Shale oil has never been of great importance in the

United States, despite our large reserves. Small quanti

-ties of oil were distilled from cannel coal and oil shale

in the Appalachian region early in the history of our

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country, but shale oil has never been produced commercial-ly from our western shales.

Current World Picture

The oil shale industries of the world are resurgent.

Sweden now is expanding its output of shale oil production 80%. Oil shale is the principal source of Sweden's sulfur

and ammonia as well as its only domestic source of oil.

Spain has a new oil shale operation geared principally

to the production of lubricants. Russia reportedly is ex

-panding shale oil and shale gas output in satelite Estonia. A new 10,000 barrel per day plant has been announced at Kochtla Jarwe and Russian technical journals for several

years have been reporting on research in the field of oil

shale.

For about 10 years, Brazil has conducted research and development work leading toward utilization of its extensive oil shale resources. A large commercial operation within

the next few years seems likely.

Elsewhere, new oil shale projects have been announced

or investigations are in progress - Thailand, Australia,

Belgian Congo, Yugoslavia - almost everywhere that oil

shale is known to exist.

Recent Oil Shale Activities in the United States

The current era of interest in oil shale in the United States begain during World War II, and has continued without

interruption. Activities mainly have been research and development on improved mining, retorting, and refining

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methods and in the acquisition of oil shale properties. Water filings also have been made by several companies. \vi th the exception of the Naval Oil Shale Reserves near Rifle, the most accessable oil shale lands are pri-vately owned. A majority of the major oil companies have shale holdings. Several are increasing their reserves and some already may be measured in the billions of barrels.

During the past 15 years, the Federal Government, private companies, and individuals have spent about $50 million on oil shale. More than half these expenditures were by private companies and individuals. Research by both government and industry on new methods of shale oil production and utilization has obtained outstanding results.

The technology is straight forward. The shale first must be mined, then subjected to a heating process (retort

-ing) to distill from it a crude oil, and finally, the oil

must be refined to usable products.

A low-cost mining method adapted to certain favorable characteristics of the Colorado oil shale deposits has been developed and demonstrated in two large-scale experimental mines, one operated privately. A large mining concern is

conducting additional experimental work on the method. Two outstanding new retorting processes have been

demonstrated on a pilot plant scale, one resulting from the government' s research program, the other, privately financed. The latter process is in an advanced stage of development having been successfully operated at a capacity approaching that of a commercial-sized retort (1000 tons per day).

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Shale oil refining research has been aided greatly by

new processes developed to refine high-sulfur crude oils. Refining methods are commercially available to convert crude shale oil to gasoline, jet fuel, diesel and other fuels equivalent to the highest quality products manu-factured from petroleum.

Economics

Many statements have been made regarding the competi -tive position of shale oil products when produced

commercial-ly. All are based on estimates of cost, usually derived from pilot plant data. Since shale oil is not produced commercially in this country there is a certain degree of

uncertainty in appraising its economic attractiveness. Careful engineering studies of the large scale appli-cation of the new methods developed for oil shale

utiliza-tion indicate that shale oil may cost no more and perhaps

less than new domestic petroleum. It is estimated that crude shale oil could be produced and sold profitably for a "well-head" price of no more than $2.50 per barrel. By comparison the posted prices of Rocky Mountain area crude oils range from $1.81 - $3.10 per barrel. Quality and

location determines the price level for a specific crude oil . The investment for shale oil production facilities of significant output is sizeable. A 25,000 barrel per day

plant may cost from $30,000,000 to $50,000,000 depending on location, retorting process selected, and the degree of

refining conducted at the production site. In addition,

pipelines must be provided to move the oil either to

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While the minimum investment for economical production cost is high, the unit investment seems reasonable compared with current exploration and development costs for petro

-leum. One estimator (47) places the investment in new and

replacement petroleum productive capacity in the United States between 1955 and 1960 at $7,500 per daily barrel. Shale oil capacity certainly is less than this figure.

~~y No Commercial Shale Oil Production?

Since the lifting of World War II restrictions, there

has been no shortage of petroleum products for the American consumer. Until 1948, the United States produced more oil than it consumed and was a net exporter of petroleum and petroleum products. As foreign crude oil became available in quantity at low cost, we have gradually increased im-ports until, on balance, we are a net importer to the extent of 15 to 20% of our petroleum demand.

Shale oil is not being produced commercially because there is no market for additional oil supplies. The

National Petroleum Council estimates that we now could in-crease petroleum production from present sources by at

least 2,000,000 barrels per day, were there a market. This

production is available with little additional investment, but it cannot compete with foreign imports.

Owing to shale oil's large initial investment and the

necessity to utilize new technology, production on a

commer-cial basis will begin only when presently developed

petro-leum productive capacity is being used to the maximum

practical extent and there is protection from competition

by imported oil.

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Growth of the Shale Industry After 1975

While the water requirements for the expansion of the industry after 1975 are not considered in this report, it should

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be i.mplied that growth v1ill stoE at this point.

There are ample reserves of oil shale for several

times the production rate of 1,250,000 barrels per day. In a study for the Corps of Engineers (17) Ford, Bacon

&

Davis cite a figure of 5,950,000 barrels per day as a possible production rate based on available reserves in Colorado alone. This level could be maintained for a minimum of 40 years. Smaller rates of production would, of course, extend the life of the deposit.

There seems no likelihood that the demand for shale oil, once established, will diminish. Students of our economy are unanimous in the belief that United States energy needs, including liquid fuels, will continue to

grow for the foreseeable future. Atomic energy is not a

competitor for most uses of petroleum. It seems reasonable to expect that shale oil production will continue to

in-crease as domestic petroleum production declines until some economic or physical limitation is reached. Assuming the availability of an adequate water supply we foresee nothing to prevent shale oil production reaching several million barrels per day.

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OIL SHALE INDUSTRY DEVELOPMENT PATTERN

It is believed that the development of an oil shale

industry will proceed in four distinct phases. This

pattern probably will be followed regardless of when the

industry start s. These phases are as follows:

Phase I Phase II Phase III Phase IV Phase I - Experimental Experimental Prototype Primary Expansion Secondary Expansion

The experimental phase started about 15 years ago and

is now in its final stages. During this period satisfactory

methods for each step in the production of shale fuels have

been developed. Some additional experimental work is being

done now, but the technology essentially is marking time.

Little additional experimentation is necessary before

building a prototype commercial plant.

Phase I might be termed the pre-prototype phase, which

will continue until the need for beginning commercial shale

oil production becomes evident to oil company management.

Phase II - Prototype

The prototype phase involves building the first

commercial scale plant (or plants). This might also be

termed the pioneer phase.

Since the technology to be used is new, many signi

-ficant improvements are to be expected as a result of this

first experience at full-scale production. This is also

the period of maximum technological risk. The objective

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of the prototype phase is not to produce large quantities of oil, but to firmly establish the technology and economics of shale fuels production before making the large

invest-ment required for shale oil to contribute significantly to our oil supply.

To keep the investment for Phase II to a minimum, the product of the first plant(s) will be marketed insofar as possible by existing transportation systems.

(Unfortunate-ly, the local market cannot absorb the output of even the

smallest prototype plant.) Studies have shown that 25,000 barrels per day of shale oil can be fairly economically

transported to market in California by way of connections

to an existing pipeline (7). Other crude oil pipeline systems in the area also could be used to transport shale oil to refineries in Colorado, Utah and Wyoming. These existing pipelines now convey about 195,000 barrels per day of petroleum and at maximum capacity can move 300,000 barrels per day. It seems reasonable that at least 25,000

barrels per day of carrying capacity can be allocated to shale oil when the time arrives.

It is thought that the Phase II plant(s) will not

in-elude shale oil refining facilities except for a means of

reducing the pour point and viscosity of the crude oil to meet pipeline specifications. The processes by which shale oil will be refined already are in commercial use, and need no demonstration such as is the case for mining and

retort-ing. Furthermore, the investment for refining facilities

is large, about equal to that for oil production. It is

probable that the ultimate refining of the product of

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Phase II will be at existing refineries in the market area. Other supporting facilities of the prototype plant(s)

also will be kept to a minimum. Electric power generation

using by-product gases will not be a part of the first plant or plants. Instead, electricity will be purchased from public utilities serving the area.

The existing local labor supply will be utilized to

the maximum extent. It is estimated that qualified

per-sonnel to the extent of about one-half of the staff, can

be employed locally. Supervisory personnel, technicians,

and certain skilled operators and craftsmen will need to

be brought in, hut essentially all can be housed in the

-towns and communities between Glenwood Springs and Grand Junction.

In summary- Phase II, the prototype plant(s), located in the Grand Valley-Debeque area of western Colorado, will produce about 25,000 barrels per day of crude shale oil.

We expect this development to occur between 1960 and 1965.

The crude oil will be moved through existing pipeline

sys-tems to refineries in logical market areas. Local labor

supply can be used for a large percentage of the staff. Existing communities and supporting facilities will meet the needs of the prototype phase.

Phase III - Primary Expansion

After sufficient operation of the prototype mining and

retorting units to establish the soundness of the methods

and to bring about the improvements which are certain to

result, shale oil production can be expanded with confidence

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and at minimum cost. Again transportation of the oil to market will be the controlling factor. The size of the primary expansion of the industry is likely to be the

capacity of smallest economic shale oil pipeline to the Pacific Coast, which we estimate will be about 150,000 barrels per day. Although larger quantities of oil may be pipelined at a lower cost per barrel, it is unlikely that a larger line would be layed at this stage of

development.

Several mines, retorting plants, and one or more refineries will be required for Phase III. The principal product will be a high-quality partially-refined shale oil,

needing minimum additional refining. The availability of

low-cost by-product fuel gas from retorting makes it more economical to refine the shale oil at the site of produc-tion rather than at existing refineries in the market area.

The expansion of production to 150,000 barrels per day is a significant undertaking in terms of capital investment and human effort. Production, refining, and transportation facilities alone will cost at least $750 million (6).

Housing and community facilities for an additional

population of approximately 45,000 persons will be required. Most, if not all, of the Phase III development will occur along the Colorado River between Rifle and Debeque and in the Parachute and Roan Creek areas. The communities

from Glen-vrood Springs to Grand Junction will share in the population growth.

The by-products of shale oil production and refining are fuel gases, ammonia, sulfur and coke. The low-heating

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value retort gases will be used to generate electricity and supply other process energy requirements. Some

electricity may be generated for local consumption in the surrounding communities. There will be no excess ene!gy from retort gas for outside industrial use.

Excess refinery gases will be used as a domestic fuel for the local communities, supplemented by natural gas from nearby fields. By-product ammonia, 250-300 tons per day, can be marketed in the Rocky Mountain area as a fertilizer. The coke and sulfur will have no local market and must be shipped outside the area.

The usage of petroleum products in the area will grow in proportion to population, and industrial uses of fuels, particularly diesel, will increase greatly. However, the

local market still will be small compared with production, probably less than 10%.

The principal supplies consumed in shale oil produc-tion and refining are drill-bits, explosives, lubricants, water-treating chemicals, catalysts, and miscellaneous maintenance materials. Essentially all such materials during Phase III will be manufactured outside the area. Construction materials such as steel, cement, lumber and other manufactured items, though required in quantity, also will largely be shipped in.

In summary - During Phase III, the production of shale oil will increase to about 150,000 barrels per day. The product will be a partially-refined oil of exceptional quality. Most of the oil will be marketed on the Pacific

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Coast through a single pipeline constructed specifically

for shale oil.

The development of Phase III should begin after a year or two of prototype plant operation, and be completed within five years or about 1970.

The industrial development will be limited to shale oil production, refining, and transportation facilities, and essential supporting utilities. Neither manufacturing plants utilizing by-products of shale nor industry

pro-ducing supplies for the shale mines and plants are fo.

re-seen during this period.

A population increase of 40,000 to 45,000 over Phase

II seems likely, with the majority living in existing

communities from Glenwood Springs to Grand Junction. Phase IV - Secondary Expansion

The growth of the shale industry following Phase III should be rapid. The technology will be firmly established.

The demand for petroleum fuels is expected to be such that rate of growth of shale oil production will be limited only by the ability of the industry to expand.

The five-year period following Phase III should see an increase of shale oil production to about 1-1/4 million

barrels per day. This is thought to be the maximum rate

at which the industry can grow with normal economic in-centives. The effect of some national emergency which might accelerate growth is not considered.

The Phase IV expansion will require an investment in the range of $5 billion, not including community facilities,

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supporting industry and other improvements. An additional

population of about 300,000 will be needed.

The Chase Manhattan Bank (43) has estimated that petroleum industry expenditures for exploration and

production in the United States for the period 1961-65

will be $27.5 billion. The investment of $5 billion

during a 5-year period for shale oil production facilities does not seem unreasonable.

The Parachute-Roan Creek area and the main stem of the

Colorado River between Rifle and Debeque will continue to

be the center of activities and most of the production during Phase IV will be from shale outcrops along the

river and tributary strea.ms; however, production of oil from the deep shales in the Piceance Creek area to the

north and from the shales in northeastern Utah should begin. Total production from these new areas may be 250,000 barrels per day.

The largest market for shale oil will continue to be

the Pacific Coast. Petroleum demand in the five states

comprising the West Coast area is growing more rapidly than

the country as a whole, and domestic production already is in decline. By 1975 demand may reach 3 million barrels per day (21). In 1958, California production, the only West Coast state with significant oil reserves, was less than 1 million barrels per day (38).

The Pacific Coast oil deficit, now 375,000 barrels per

day (38) is supplied by overseas imports, and oil pipelined

from Canada and the Rocky Mountain area. By 1975 when 2

million barrels per day of outside supply will be required

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it seems likely that a shale oil market exceeding 500,000

barrels per day will exist.

The other major market for shale oil from Phase IV

probably will be in the Middle West. Petroleum and petroleum products now come to this area, largely by pipeline, from Texas, Oklahoma, the Rocky Mountain area,

and Canada. Production in the area is small compared with demand. The output of a 1200 mile, 500,000 barrel per day shale oil pipeline to the Chicago area should be easily absorbed 10 or 15 years from now.

Local demand for shale oil products will have increas-ed several-fold on account of the increase in population

and the level of industrial activity. This demand will be

in the range of 50,000 barrels per day.

We anticipate significant changes in the technology as a consequence of Phases II and III. The methods used

for Phase IV production will require less investment per

unit of production, will make better use of the raw

material, giving higher yields of superior products and

most likely, will utilize the lower grade shales not now considered economical. However, the probability of using in-situ combustion, atomic explosions or some other revo -lutionary method during this period seems remote.

We believe that refining technology and economic con

-ditions will improve such that in the new refineries built

during Phase IV, the crude shale oil will be hydrogenated directly rather than being coked before hydrogenation.

This step will result in a significant increase in the yield of liquid product and, of course, will eliminate coke as a

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by-product. It also will still further reduce the

avail-ability of by-product gases from retorting and refining. It is probable that a supplementary energy source, such as coal or natural gas, will be used to supply a part of the ene~ requirements of the shale oil plants.

The principal by-products of shale oil production and refining during Phase IV will be ammonia and sulfur. Coke production probably will have increased slightly over the

level of Phase III, but it is doubtful that refinery gases will be an important product for outside use.

It has been suggested that shale oil production would provide raw materials for a petrochemicals industry. While

several shale oil fractions, in particular the lighter

hydrocarbons from hydrogenation refining, are suitable petro-chemical raw materials, it is doubtful that they will be

used as such in western Colorado. First, petroleum con-sumed as petrochemicals amounts to only about 2 percent of the petroleum demand and raw materials from current sources

seem adequate for the foreseeable future. Second, western

Colorado is far from chemical markets and is handicapped by

high freight rates. If shale oil is used as a petrochemical

raw material, it is likely to be converted to chemical

pro-ducts at pipeline terminals in the market area.

The use of oil shale directly, as a chemical raw mater-ial, is a distinct possibility in the future, but the

tech-nology to derive valuable chemicals from shale has not yet been fully developed. The lack of readily usa.ble processes and plentiful raw materials from other sources makes it

doubtful that oil shale will be used for chemicals production

to an appreciable extedduring the next 15 years.

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The growth of shale oil production to the

propor-tions envisioned in Phase IV will bring with it some

related industry. Tonnage quantities of explosives will

be required. Ammonium nitrate, which can be manufactured

from by-product ammonia, seems likely to be the principal shale-blasting agent. As much as 500 tons per day will be consumed for shale mining alone. This amount will support a large-sized ammonium nitrate plant. Sulfuric acid for general industrial use may also be manufactured from by-product sulfur.

Cement is perhaps the largest tonnage manufactured

material required by shale industry and its community.

The usage of cement in the area will be sufficient for a plant of economic size. Raw materials are available. Spent shale may be used as an ingredient.

Water treatment and the building industry will greatly increase the demand for lime in the area and this industry should expand considerably.

Many small service and manufacturing operations will be conducted to serve this $5 billion industry and the

400,000 or more population in the area. There will be more new businesses of this type than were the development to

occur in a more populated area. Very little supporting industry of the kind required now exists.

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-To summarize - Shale oil production during Phase IV from 1970 to 1975 will increase to about 1-1/4 million

barrels per day. This is less than 8% of anticipated U.S.A.

petroleum demand in 1975.

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The product, principally hydrogenated shale oil,

free of contaminants and equivalent to the highest

quality crude petroleum, will be transported by

large-capacity pipelines to markets on the Pacific Coast and

in the Middle West. The gasoline and other fuel requir

e-ments of the local community also will be served from a

complete shale oil refinery in the area.

In addition to shale oil facilities costing an

esti-mated $5 billion, a moderate supporting industry will begin

during this period. Explosives, sulfuric acid, lime, and

cement are most likely to be manufactured. Numerous

manufacturing and service facilities of lesser magnitude

also will be started.

It is unlikely that oil shale by-products will be

utilized locally except for explosives, sulfuric acid and

possibly cement manufacture.

A populat ion of nearly 300,000 in addition to the

Phase III development is foreseen making the total popula

-tion for shale and related industries about 340,000. Rio

Blanco County and Uintah County, Utah will share this

population growth.

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WATER REQUIREMENTS FOR SHALE OIL PRODUCTION The production of the crude shale oil requires very little water. Consumption of water for mining chiefly is for drilling blast-holes and as a dust palliative.

Retort-ing uses only bearing-coolant water and ·a small amount of steam for heating and cleaning purposes. Processes have been developed which do not require water for cooling and condensation of the oil. (Certain European processes con-sume steam directly in the retort, but this type process is not now under consideration for Colorado shale.) Personnel, of course, require drinking and sanitary water. Overall water requirements for crude oil production, both mining and retorting, are less than 10 gallons per barrel of oil,

of which a small amount can be reused or returned to the stream.

Shale oil refining requires relatively large quantities of water both as a process coolant and for the generation of steam. Since steam is consumed in the manufacture of hydro-gen, where refining processes use hydrogen as a reagent,

this particular requirement is larger than in conventional

refineries. Steam also is used to drive pumps and compressors. Cooling water requirements for refining are large even when exchanging heat between hot outgoing and cool incoming process streams. In the refining process some of the oil

fractions are heated to elevated temperatures several times and the products must be condensed and/or cooled between process steps as well as when refining has been completed.

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Water usually is the most economical coolant for this pur-pose.

Cooling water may be used once or recirculated. On a once-through basis, most of the water would be returned to the stream essentially without loss, but at a higher

tempera-ture. A recirculation system uses some type of evaporative cooling to re-cool the water and very little is returned to

the stream.

Once-through usage requires a large year round water supply and if the stream contains considerable impurities, the expense of treating may be significant. For a

recircula-ting cooling water system, only make-up water is required,

usually no more than 10% of the quantity needed on a once-through basis.

Because of seasonal fluctuations in stream flow and the probability of having to chemically treat the water to make it usable, we have assumed the use of recirculating cooling '\'Tater systems for our estimate of water requirements.

Electric power plants are another significant consumer of water. Here again, cooling and condensation is the largest

requirement. For average steam-elecric plants uing recircu-lated cooling water, 7 pounds of water are consumed for each kilowatt-hour of electricity generated.

The total water requirement for shale oil production and refining including electric power generation, may vary

from 50 to 100 gallons per barrel depending on the refining process used. Perhaps 10% of this water would be returned

to the stream.

Shale-related industry, which will not become important

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until the beginning of Phase IV, the secondary expansion of shale oil production, will require additional quantities of water. For instance, a 500 ton per day ammonium nitrate plant will require 6,000,000 gallons of water per day. It is impossible to determine water usage by the many small

supporting plants, but it is certain that requirements will be significant.

A large usage of water attributable to a shale industry

will be in the homes and cities of the workers and supporting personnel. The per capita usage of water in western communi

-ties is higher than in areaswhere lawn irrigation is not practiced. The larger western Colorado towns use up to 480 gallons per day per person. The factor for Grand Junction is now 297. A recent survey of large western cities by Langbein showed most used greater than 300 gallons per day per capita. A water-use factor of 300 gallons per person

per day is assumed in this report. On the average about 2/3 of this water should return to the stream.

\'later Requirement for Phase I

The usage of water for shale during the experimental phase before any commercial production begins has been

variable, but insignificant. There is no reason to believe

that future experimental work,if any, will require water

supplies additional to those already developed. However,

since prototype production is expected to start between 1960 and 1965, a water supply capability of at least 2500 acre-feet per year, if not already in existence, is suggested

starting in 1960.

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Water Requirement for Phase II

The production of 25,000 barrels of shale oil daily during the prototype phase is estimated to require 1300 acre-feet of water per year of which 550 acre-feet wou1d be

returned. Municipal water for the new population is included.

Tables 3 and 4 summarize supporting data for this estimate. It should be noted that over half the personnel for Phase II presently reside in the area. The relatively small new population is expected to live in existing communities; therefore, it is unlikely that additional water supplies will

need to be developed for municipal use during this phase.

Industrial usage for Phase IT also is smal l , but whether or not a firm year-round supply is available depends on who builds the plant(s) and their location. It is possible that water usage by the prototype plant(s) could be larger than estimated if the oil is more highly refined at the site of production, than assumed. As much as 1750 AF/Yr. would be

required for a production rate of 25,000 barrels per day if a hydrogenated coke distillate were the product. It would seem prudent to assume this larger water usage.

For planning water supplies it is suggested that a factor of 2.0 be used to insure an ample margin for larger

production quantities than assumed. On this basis the water supply capability for Phase II should be 5000 acre-feet per year.

Water Requirement for Phase III

The production of 150, 000 barrels per day of partially

-30-refined shale oil is estimated to require 27,000 acre-feet of water per year for municipal and industrial use of which

11,000 acre-feet would be returned to the stream. Tables

3 and 4 give supporting data. These figures are inclusive of any water diverted for use during Phase II.

Since a basic assumption is that all the shale oil will

be refined in the area, the estimate of water use probably

is maximum for this oil production quantity. For planning water supplies it is suggested that a factor of 1.5 be used to cover errors in estimation and larger production quanti

-ties than assumed. Applying a factor of 1.5, the water supply capability for Phase III should be 40,000 acre-feet per year.

''later Requirement for Phase IV

From Tables 3 and 4 it may be seen that estimated water use for the production of 1, 250,000 barrels of refined shale oil per day is 252,000 acre-feet of which 93,000 acre-feet would be returned. These figures are for industrial and

municipal use for both shale oil production and shale-related

industry. Usage is inclusive of that estimated for previous phases of development. All shale oil is assumed to be re

-fined in the area, thus water use should be maximum for the oil quantity assumed.

For planning water supplies, we suggest taking the water

usage estimated without application of a factor to account for

errors. The period in question is sufficiently far in advance to allow reappraisal when the actual pattern of development becomes evident. Our current recommendation for a water

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supply capability for oil shale development for the period

1970 to 1975 is 250,000 AF/Yr.

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TABLE 3

SUMMARY OF WATER USE DATA FOR

COMMERCIAL SHALE OIL DEVELOPMENT (figures rounded) Prototype Primary Expansion Secondary Expansion Period 1960-65 1965-70 1970-75

Shale Oil Production, B/D Water Requirements, AF/Yr.

Shale Oil Production and Refining Diverted Consumed Shale-Related Industry Diverted Consumed

Municipal (New Population} Diverted

Consumed

Total Municipal and Industrial

Diverted Consumed Location

Garfield-Mesa County Rio Blanco County Uintah County, Utah Recommended water Supply Capability, AF/Yr. -33-25,000 550 500 750 250 1,300 750 All 5,000 150,000 1,250,000 12,000 11,000 15,000 5,000 27,000 16,000 All 40,000 127,000 114,000 10,000 5,000 115,000 40,000 252,000 159,000 80% - 1~~ 8% 250,000

TABLE 4

SUMMARY OF POPULATION FOR

COMMERCIAL OIL SHALE DEVELOPMENT

(figures rounded) Prototype Primary Expansion Secondary Expansion Period 1960-65 1965-70 1970-75 Shale Oil Production, B/D

Permanent Shale Personnel Production,

1/

Construction,

l /

Other Industrial Total Employed

Service Personnel, New,

1/

Households, New,

if

New Population,

2/

Location

Garfield-Mesa County Rio Blanco County Uintah County, Utah

25,000 900 900 360 630 2,300 2,300 150,000 1,250,000 6,900 1,500 8,400 7,100 12,500 45,000 45,000 50,000 9,000 1,000 60,000 53,500 93,000 340,000 275,000 40,000 25,000

11

500 production workers from existing local population.

1/

Prototype construction personnel local or temporary: one-half construction personnel for expansions permanent.

1/

Trades and professions not directly employed in the s~ale

industry. Calculated as 90% of shale personnel added to community.

if

Calculated as 1.2 employed personnel per household.

2/

Calculated as 3.6 persons per household.

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BIBLIOGRAPHY

1. American Petroleum Institute, "Report of the Committee

on Petroleum Reserves" Washington, D. C.

2. Anderson, C.C., "Petroleum and Natural Gas in the

United States · Relation of economic and technologic

trends. Paper presented before World Power Conference,

Montreal, September, 1958.

3. Barnett, Harold J., "Energy Uses and Supplies, 1939,

1947, 1965" Bureau of Mines Information Circular #7582,

United States Department of the Interior, October 1950.

4. Burke, H.G. Jr., "Statement on Behalf of Esso Standard

Oil Company" Presentation before the United States

Tariff Commission on the subject of oil imports, 1951.

5. Cadle, A., "Personal Communication, April 17, 1959"

On projection of petroleum supply and demand through

1975.

6. Cameron, R. J. and Miller, E .P., "Shale Oil Nears

Competitive Level with Domestic Petroleum" Journal of

Petroleum Technology, August, 1958.

7. Cameron and Jones, Incorporated, "Colorado Shale Oil

Production Costs" Private study, June 12, 1958.

8. Carson, M.V. Jr., "Personal Communication, April 22,

1959" On probable imports for the next ten to fifteen

years.

9. Colorado Conference Committee and the Colorado Water

Conservation Board, "Water Requirements of an Oil

Shale Industry" Presentation as to water requirements

of an oil shale industry by a committee composed of

major oil shale land holders. September 24, 1953.

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BIBLIOGRAPHY

10. Colorado River Conservation District, "Stage Develop-ment Plan for Supplying Municipal and Industrial

Water for Potential Oil Shale Industry in Western

Colorado" Glenwood Springs, Colorado, 1958.

11. Coqueron, Frederick G., Hammer, H.D., Winger, J. G.,

"Future Growth of the World Petroleum Industry"

The Chase Manhattan Bank, New York, November, 1958. 12. Coqueron, F.G., "Financial Requirements of the World

Petroleum Industry" Investment Dealers Digest,

December 1, 1958.

13. Davis,

M

.

J., "Let's Stop Selling U.S. Reserves Short" Oil and Gas Journal, December 8, 1958. (p.80)

14. Davis, Vf., "Future Productive Capacity and Probable Reserves of the U.S." Oil and Gas Journal, February 24,

1958. (P.l05 to 116)

15. Davis, Warren B., "Personal Communication, April 24,

1959".

16. Elliott, Martin A., von Fredersdorff, C.G., '.'A Rational

Analysis of the Future Rate of Production of Natural Gas" A report from the Institute of Gas Technology. 17. Ford, Bacon and Davis, "The Synthetic Liquid Fuel

Potential of Colorado" Corps of Engineers, Department

of the Army, December 14, 1957.

18. Gejrot., Claes, "Descriptive pamphlet of Swedish Oil Shale operation" Svenska Skifferolie, AB, Orebro, Sweden, 1958.

19. Hartley, F.L. "Progress in Oil Shale Research" Paper presented before the 38th National Meeting of the A.I.Ch.E., Salt Lake City, September 22, 1958.