Oil & Gas SKPETRO (5218) : What Is Oil Shale ?

Oil & Gas  SKPETRO (5218) : What Is Oil Shale ?

Much have been said about oil shale in the media lately. So what exactly is oil shale ?

IER (Institute of Energy Research) : Oil shale is a fine-grained sedimentary rock which is very rich in organic sedimentary material called “kerogen.”

The shale is heated to separate the kerogen from the rock and the resultant liquid is converted to superior quality jet fuel, diesel fuel, kerosene, and other high value products.

So oil shale isn't like the natural oil found in the ground or in the ocean!

The process explained in a diagram -

Source: Wall Street Journal

Locations of Oil Shale 

Oil shale is found in many parts of the world, as the map above shows, but too bad, Malaysia isn't one place where oil shale could be found.

The figures from 1- 9 show where the oil shale are found in abundance, with the USA being the number 1 having the most recoverable reserves.

OPEC vs Oil Shale Producers

OPEC and the oil shale producers have one common goal : to extract out the oil and make lots of money. However, if both were to extract in large amounts, an oversupply situation will happen and lead to low international oil prices.

OPEC will probably do nothing - lower international oil prices will kill off the oil shale producers FIRST because the oil shale extraction costs are much higher than most of OPEC & other crude oil producers countries costs (diagram below shows).

Note: NAm Shale in the diagram above is North America oil shale, costs $65/barrel to extract out.

Impact on O&G stocks on Bursa Malaysia

Expect an adverse impact on these O&G stocks share prices to continue as long as oil prices continue down. All of these O&G stocks are trading way below their 200 day MA and 50 day MA. 

    GA

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