Production of diesel fuel from oil shale

Thumbnail Image
Journal Title
Journal ISSN
Volume Title
University of New Brunswick
The continuously increasing demand of diesel has warranted an exploration of additional means of production. Oil shale is a suitable material for the production of high quality diesel, as processed oil shale yields liquid hydrocarbons that are in the range of middle distillate fuels. Shale oil, which is classified as heavy oil, is prevalent in South Eastern New Brunswick, especially Albert County. The objective of this project is to assess the commercial viability of using retort technology to produce high quality diesel from oil shale. This project will focus on reducing the energy costs as well as environmental impact while using oil shale as a feedstock. The processes of converting shale oil to diesel for this proposed plant are comprised of extraction, distillation, hydrofining (hydrotreating and hydrocracking), and an SO2 removal system. In the extraction process, the Brazilian Petrosix Retort™ was determined to be the best suited technology. The feedstock to the plant is approximatly 12400 tonne/day of oil shale. This was chosen to meet 10% increase in market demand since 2008 in Atlantic Canada. In the refining of shale oil, an atmospheric distillation column was used, sending approximately 5500 bpd (barrels per day) of middle distillates and heavy bottoms to the hydrofining section. The total volume of diesel produced at the end of the process is approximately 5150 bpd. Although the plant produces a considerable amount of fuel to run most of its processes, there is still a need to purchase additional fuel. The refinery was estimated to require a total capital cost of $797 million (Canadian dollars) and an operating cost of $185 million per year. Hours of operation were set at 3, 8 hour shifts and the plant will run for 360 days a year. The final manufacturing cost for the production of a barrel of diesel is $101. At a current price of $136 per barrel of diesel, this plant is profitable. The annual profit before tax is estimated to be $66 million. An economic analysis was done over a period of 15 years and a payback period of 11 years was determined with maximum deprecation of 40% per year after the first three years. The internal rate of return (IRR) and return of investment (ROI), for this condition was determined to be -0.06% and 4.4%, respectively. These values fall below the acceptable minimum which is 5% (IRR) and 15% (ROI).The life of the proposed plant is approximately 30 years, which is typical for similar plants. It is evident that investment in this the plant is not favourable at this time. It will be favourable when the price of crude is $133 per barrel, giving a wholesale cost of $180 per barrel of diesel. This condition was determined to give a payback period of 5 years.