In the oil and gas industry, “unconventional oil” refers to crude oil obtained through innovative methods rather than traditional vertical well extraction.
Examples of these methods include the development of oil sands, directional drilling, and hydraulic fracturing (commonly known as “fracking”), among others. Today, unconventional oil is becoming increasingly prevalent, driven by technological advancements and economic considerations, making it more cost-effective and profitable. However, some concerns persist regarding the environmental impact of unconventional oil extraction methods.
Key Takeaways
- Unconventional oil is crude oil extracted using relatively new and/or sophisticated methods.
- Historically, unconventional oil was pursued during periods of high oil prices when costlier methods were economically justified.
- Technological strides in unconventional oil extraction have increasingly integrated into mainstream oil production practices, such as directional drilling techniques.
How Unconventional Oil Works
Two main reasons explain the rise of unconventional oil: economic climate and technological innovations. During periods of low oil prices, companies are incentivized to develop techniques for more efficient oil extraction.
These improvements range from increasing equipment speed and reliability to reducing personnel dependency through automation and developing fiendishly clever mechanics that economize both equipment and manpower. Techniques like directional drilling, for instance, allow firms to access multiple underground reserves using a single vertical well, reducing the need for numerous vertical drill sites.
Similarly, persisting high oil prices can make previously uneconomical oil reserves commercially viable. One outcome of this environment was hydraulic fracturing, which involves using steam, gas, and chemicals to access hydrocarbons locked within rock formations.
As oil resources dwindle and face competition from alternative energy sources like solar, wind, and nuclear power, the industry continues to evolve to enhance extraction efficiency. More oil extraction methods will likely be viewed as unconventional by historical standards, suggesting an ongoing trend of innovation.
Example of Unconventional Oil: Fracking
Perhaps the most renowned example of unconventional oil extraction is hydraulic fracturing, invented in 1947 by engineers at Stanolind Oil and Gas Corporation. Fracking’s core idea is to release hydrocarbons trapped within underground rock formations and make previously inaccessible oil available.
This involves injecting highly pressurized fracking fluid into a well to create fissures in the rock formations. The newly liberated oil then ascends the well towards the low-pressure surface, propelled by artificially induced pressure and chemical injections that regulate the oil’s viscosity.
Example of Unconventional Oil: Oil Sands
Another prime illustration is oil sands, also known as “tar sands,” containing crude bitumen—a dense and viscous form of crude oil. Extracting bitumen is a complex and costly process that has become less expensive due to technological advances.
When market prices for oil are high, extracting oil from oil sands becomes profitable. Major deposits occur in regions like Athabasca, Cold Lake, and Peace River in Canada, and also in Venezuela, Kazakhstan, and Russia. Recovery techniques for bitumen encompass mining and in-situ methods.
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