Oil shale economics
Synthetic Crude oil produced from the Rendall process is similar in quality to a light, low sulphur crude oil such as Brent crude oil. This synthetic crude oil is then refined into high quality gasoline, kerosene (jet fuel),and distillates in an oil refinery, either co-located at the Rendall plant site or at an alternative location.
The selling price of synthetic crude oil produced by the Rendall process ex works is assumed to be the same as Brent Crude Oil.
The capital and operating costs of the Rendall process must be low enough to produce synthetic crude oil below the long term cost forecast of Brent Crude adjusted for freight costs.
Virtually every reputable forecaster of crude oil prices predicts that long term Brent crude oil price will remain at or above today’s current price of around USD 100/bbl ($2012). Many forecasters have much higher price forecasts.
The operating costs for a medium sized (15,000 bbl/day) Rendall process plant are around USD 25/bbl (including mining costs)
The capital costs for a 15,000 bbl/day Rendall process plant will be dependent on location but, at Julia Creek, are expected to be around USD 40,000 per daily barrel of capacity.
Combining the capital and operating costs results in an all up total cost (including a return on capital) for synthetic crude oil production of around USD 40/bbl.
The all up total costs for a larger 50,000 bbl/day are expected to around UDS 30/bbl.
With selling prices expected to be at least USD100/bbl, each Rendall process plant would generate substantial profits.
While the above estimates contain contingencies of 40%, it is acknowledged that there could be additional unforseen costs incurred in the production of synthetic crude oil. However, the margins appear to be sufficient to cover such unexpected events.