What Is Unconventional Oil?
Let me tell you about unconventional oil in the oil and gas industry—it refers to crude oil obtained through methods other than the traditional vertical well extraction.
These methods include developing oil sands, directional drilling, and hydraulic fracturing, which you might know as fracking, among others. Today, unconventional oil is becoming more common, thanks to new technological developments and economic factors that make it cost-effective and profitable. That said, some people worry that these extraction methods could harm the environment.
Key Takeaways
- Unconventional oil is crude oil extracted using relatively new and/or complex methods.
- Historically, unconventional oil was linked to periods of high oil prices, where costlier methods became economically justified.
- Increasingly, technological advances from unconventional extraction, like directional drilling, are being implemented in mainstream oil production practices.
How Unconventional Oil Works
There are two main reasons why unconventional oil has grown more common recently. First, it's about the economic climate in the oil extraction industry. For example, when oil prices are low, companies push to develop new technologies for more efficient extraction.
In practice, this involves speeding up and making equipment more reliable, cutting down on personnel through automation, creating techniques that reduce equipment or staff needs, or combining these approaches. All of this leads to extraction methods that differ greatly from traditional vertical wells. Take directional drilling—it lets companies access multiple underground reserves from one vertical well, which used to require several drill sites.
The same applies when oil prices stay high. Then, reserves that were once too tough to exploit economically become viable. High oil costs, for instance, spurred the development of hydraulic fracturing, which uses steam, gas, and chemical injections to break up rock formations and release the hydrocarbons inside.
In the end, it seems inevitable that more oil extraction techniques will be viewed as unconventional by historical standards. As oil gets scarcer and faces competition from alternatives like solar, wind, and nuclear power, the industry will keep evolving its methods to boost production efficiency.
Example of Unconventional Oil: Fracking
Perhaps the most well-known example of unconventional oil extraction is hydraulic fracturing, first invented in 1947 by engineers at the Stanolind Oil and Gas Corporation. The core idea is to create new accessible oil reserves by freeing hydrocarbons trapped in underground rock formations.
This happens by injecting highly pressurized fracking fluid into a well, which creates fissures in the rock. The oil that escapes these fissures then flows up through the well toward the low-pressure surface. To speed this up, we artificially increase pressure in the reservoir and use chemical injections to adjust the oil's viscosity.
Example of Unconventional Oil: Oil Sands
Another example is oil sands, also called tar sands, which are soil and rock materials containing crude bitumen—a dense, viscous form of crude oil. Bitumen is too thick to flow on its own, so you need specialized methods to extract it. Recovering usable crude from oil sands is complex and expensive, but technological advances have reduced costs over time, and when market oil prices are high, it becomes profitable.
You'll find oil sands mainly in the Athabasca, Cold Lake, and Peace River regions of northern Alberta and Saskatchewan in Canada, as well as in Venezuela, Kazakhstan, and Russia. Bitumen is extracted and processed using two methods: mining and in situ.
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