By Î.Khostsetseg
Expectations of reduced energy dependence were raised when Mineral Resources and EnergyMinisterD.Zorigt declared at the Economic Forum that once “some important agreements” were out of the way, the Government wouldpay serious attention to developing the country’s shale oil resources.This is widely tipped to be a major energy source of the future but the prohibitive costs of shale processing and successive discoveries of new oil deposits in the past few year shave stood in the way of its exploration in Mongolia. The Minister’s statement changes this.
Serious and commercial interest in shale exploration began in the U.S. in 2002. Use of a new drilling technology called hydraulic fracture-- colloquially known as “fracking” -- in South Dakota revealed that a great amount of natural gas and oil can be extracted from oil shale. MMJ published an article on fracking in its February issue. To recapitulate for the benefit of those who missed it, the technology combines features of the common type of vertical drilling with newer methods of horizontal drilling. In the former, a number of vertical wells are drilled to reach the underground oil and natural gas deposits, but the new technology requires drilling of only one vertical well, with horizontal drilling taking over from there, as it follows the oil and gas veins.
A mixture of water, sand and special chemical substances is injected into the surface of the oil shale. Its impact breaks down the wall and makes it possible to extract gas and oil without drilling any more vertical wells. Extraction comes in very small amountsbut, as a Mongolian saying goes, “Small drops make an ocean”.
The minister’s statement did not come as a surprise to those who had always known that there is oil shale in Mongolia, very likely in substantial quantities.True, little serious or systematic study has been made since it was found between 1940 and 1950 that the country had more than 40 deposits of shale. In the early 1960s, Hugshin Gol and Zuunbulag oil shale deposits were mined to see if the mineral could be used as fuel. The first detailed study was made in 1982, when extracts from several deposits in Nyalga, Choibalsan, the Dundgovi area, Tugrug, Bayanjargalan, Bayan Erkht, Sumiin Nuur, Eedemt, Khuut and Shavart Ovoo were sent to Estonia and Japan for laboratory tests. The results showed that the sample from Eedemt had a high content of pitch, proving that the shale was of good quality.
The very first, and until now the only, estimate of oil shale reserves was madein 1994. The professionals responsible, D.Bat-Erdene andL.Jargal, calculated Mongolia had 23 billion tons of oil shale pitch, a raw material with properties similar to those of oil. It has to be remembered that the 23 billion tons of reserve was of oil shale pitch, anddoes not refer to oil shale itself. When the pitch is processed, it can be made into petroleum products that are now in common use.Local availability of the resource is welcome news for us, as Mongolia regularly suffers frominterruptions in oil imports. There is also high probability that the extent of the reserves will grow with further exploration.
Oil shale is rich with organic substances. M.V.Lomonosov was the first to suggest, in 1763, that petroleum had biological origins. It is now certain that oil shale and oil aquifers were created from the remains of dinosaurs and other creatures that lived millions of years ago. These stayed stuck in the sand underground, and over millennia, some turned into liquid petroleum while what got hardened became oil shale. The first oil shale and oil deposits were formed nearly 600 million years ago. It is very probable that since dinosaurs were abundant in the area that is now Mongolia, our oil and oil shale reserves will also be huge.
However, extraction will not be easy. For several reasons the American technology of fracking, now in use, is totally unsuitable to Mongolia. Costs are kept low in the U.S. as there use is made of already existing boreholes, but we shall have to drill all new holes. We have to build a totally new system from scratch, including construction of pipes to carry the extracted gas and oil, and this would require an enormous amount of time and money.
Second, fracking has been successful at depths between 1800 metres and 2400 metres. Drilling so deepin Mongolia is very difficult. Third, a lot of water is needed to extract shale gas and oil from underground, but allour currently known deposits are in the Gobi where water is scarce.
Another worry is the damage fracking does to the environment. A video posted on some websites shows an American woman claiming her pets are getting sick because of the chemical emissions in the air caused by hydraulic fracturing. How this affects the quality of the drinking water is also raising popular concern.
The chemical that is injected may very well cause groundwater contamination. Locals have reported how water from the taphas been hot.Some scientists give the assurance that this is no deal. Even in the 18th century, when there was no deep drilling, therewere similar reports from Pennsylvania, and the phenomenon was explained as a natural geological process. The affected people, however, are not convinced and the drilling companies are chary of issuing a formal denial that their work is not the cause. Risk of cancer is high in areas where there is chemical emission and groundwater contamination. The locals have come together to sue the drilling companies. Clips from an anti-fracking song are showing on music channels.
Despite all such concerns, the American Government hasnot banned fracking, but there have been reports that it has asked for a comprehensive plan to redress all the environmental problems thatit is alleged to be causing. American companies still havenot made much of a profit from their investment on shale gas, and they are unlikely to give up until they do.
It is my personal opinion as a journalistthat fracking technology has a low chance to succeed in Mongolia, but of course the last word will be with scientists and field experts.
Retorting technology of EstoniaEstonia tops the world with its shale reserves, and the technology used there to process oil shale is called “retorting”. Oil shale is the only mineral Estonia has, so the technology is very important for its economy. Estonia makes more than 70 products from oil shale, including ones similar to the usual petroleum products, as also glue and a substance that helps tan leather and hide.
Retorting involves the following steps. First, the oil shale is mined. Then the shale is divided into small pieces of 4-5 cm each and sorted. Finally, by heating and melting, the pitch is extracted. Direct retorting refers to extraction of pitch by heating and melting while indirect retorting extracts through contact with gas or a solid substance. Though oil shale disintegrates easily at a comparatively low temperature, the cost of mining, transport, and sorting is high in retorting. Fracking is expected to be more cost-effective as extraction is conducted underground, but this is yet to be confirmed. Since fracking may not be suitable for Mongolia, we should send our professionals to Estonia for on-site studies on retorting.
A Russian’s word of caution
Vladimir Fedorov, a Russian researcher, thinks all this enthusiasm about oil shale is misplaced. Back in 1821, American scientist William Hart conducted horizontal drilling in shale aquifers, and today’s methods arefundamentally the same as those used by him. There is a wide body of opinion that horizontal drilling cannot make a well that will last long enough. Fedorov feels claims of profitability from young wells are deceptive and are meant to prop up the share value of the companies. The U.S. Energy Agency has also expressed doubts about the meritsof fracking claimed by private companies.
I quote a passage from an article by Fedorov:“They have re-drilled used wells that were left behind due to the economic crisis and put ridiculously numbers on papers. They are soaring too high with the invention of “fracking”. It is true that the technology increased the capacity of old wells by 30 to 50 times. Hydro impact connects the veins and sucks the gas out from some small mines and is creating a false hope. But this will not last long. Oil shale’s solidity and its structure independent from one another makes its effectiveness valid for a short time.
Those wells that they are so proud of have a maximum life of only a few months or a year, while one well at Urengoy has a capacity to extract natural gas for 10 to 15 years. This new drilling technology can only be used in the U.S. But it will be nothing but a myth in Europe and Asia. The cost of extracting gas with a new method is very high. The cost of extracting 1,000 cubic meters of gas works out to USD212-283 whereas Russia’s Gazprom extracts the same amount with only USD19. Oil shale might help the U.S. to increase employment and supply domestic needs. But for other countries it will be a meaningless act to implement the new technology.”
Everyone is free to believe these words or not. Fedorov may very well be a person who is annoyed by the fact that the U.S. is supplying its own needs and thus affecting Russia’s monopoly in the field. However, some American scientists also agree with Fedorov. The February issue of the National Review has an article about the cost of horizontal drilling being high and the ecological concerns being huge.
As far as our country is concerned, we have nothing but tentative figures and no serious study byqualified specialists. This may come in time but until then, we have to do with other countries’ experiences and findings. It is an advantage that we do not have to do everything a new but carefully review others’ mistakes, failures and successes before committing valuable human and financial resources into a brand new field. Much needs to be done before Minister Zorigt’s plans and assurances, as mentioned in the beginning of this article, become reality.
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By Î.Khostsetseg