Oil Shale Trials Show Promise But Leases Shrink

Efforts to mine oil from rock are ongoing in Wyoming, Colorado and Utah, speakers at a symposium said Tuesday, the same day Interior Secretary Ken Salazar said in Salt Lake City that he would cut the size of new oil shale leases.

Representatives from at least three of the four companies with existing 160-acre leases on federal land for research and development were at the symposium at the Colorado School of Mines. Roger Day of American Shale Oil said the company has obtained five of the permits it needs and has posted bonds to start work on its parcel in northwest Colorado.

The company plans to start its pilot project late next year.

“Most of the infrastructure is in place,” Day said.

Peter Crawford of Intek Inc., an energy management company that works with the U.S. Department of Energy, said there are at least 35 companies working on oil shale and tar sands.

“When we heard earlier that nothing’s going on, that’s really a misconception,” said Glenn Vawter, executive director of the Colorado-based National Oil Shale Association.

Vawter was referring to a Colorado official who said the state has asked the Interior Department to assess what is happening on the public land leased for research, development and demonstration projects. Bob Randall of the Colorado Department of Natural Resources said Monday that the state supports oil shale development but wants more information about the potential environmental and economic impacts.

Randall said state officials also believe that more leases on public land aren’t needed at this point to test the technology.

Vawter, however, said the deepest, richest oil shale deposits are under federal land. He said the companies that won leases on five parcels in Colorado and one in Utah have been busy with feasibility studies and evaluation of the geology.

The oil shale deposits in the Green River Formation in Wyoming, Colorado and Utah are believed to be the richest in the world. Federal officials estimate the shale holds from 2 trillion to 2.5 trillion barrels of oil. Western Colorado’s Piceance Basin alone contains about 1.5 trillion barrels of oil, according to the U.S. Geological Survey.

Last year, the Interior Department approved a plan to open nearly 2 million acres of the area to oil shale development. State and federal permits and more environmental reviews would have to be completed before individual projects could move forward.

The trick is getting the oil out of the rock, something that has been tried off and on in this country for about a century. Estonia’s oil shale industry is about 100 years old. Brazil and China also produce oil from shale.

The oil is really kerogen, a precursor to oil that wasn’t buried deeply enough or naturally processed long enough to complete the transformation to oil. Turning the shale to oil requires heating it: above ground after mining or, in the ground, a process called in situ — “in place.”

Colorado officials, environmental groups and area residents are concerned commercial oil shale development will consume huge amounts of water in the semiarid region, require new power plants, create pollution and possibly harm wildlife and water quality.

As a U.S. senator from Colorado, Salazar criticized the Bush administration’s environmental analysis of oil shale’s impacts as inadequate and the royalty rate for commercial production as too low. Earlier this year, he withdrew offers of a second round of federal leases and Tuesday announced that he would scale back their size.

Some industry and government officials at the oil shale symposium said developing the country’s vast oil shale reserves will be necessary as global demands for energy keep increasing. They said building the industry could also create jobs and reduce the country’s reliance on foreign oil.

Jeremy Boak, head of the Center for Oil Shale Technology and Research at the Colorado School of Mines, said he was disappointed by Salazar’s decision. He said he believes it will make it more difficult to do the research that is needed.

“I feel like the arguments are highly political arguments, not technical ones,” Boak said.

The 29th oil shale symposium, hosted by the Colorado School of Mines and the Center for Oil Shale Technology and Research, runs through Wednesday.

10/20/2009 9:50 PM JUDITH KOHLER GOLDEN, Colo. (AP)