Vernal company set to exploit oil shale

For the past 30 years, the mantra about oil shale has been that as soon as crude rises above (choose your amount), it would become economical to extract oil from the greasy rock deposits that abound in eastern Utah.

Then Utah would be the Saudi Arabia of oil shale, continued the prediction.

During the 1973-74 OPEC embargo, oil jumped to above $5 a barrel, not high enough for oil shale. It soared again during the Iran-Iraq war to just under $40, according to Department of Energy figures — still a tad too low, considering the expected start-up costs.

Today, the American Petroleum Institute reports that world crude oil has reached the dizzying height of $54 a barrel — rocketing $12 since the first of the year.

Now's the time to extract shale oil, says Oil Tech, a new company based in Vernal that has built an 80-foot prototype retort near Bonanza, Uintah County.

Backers say the project can produce oil at $10 to $20 a barrel and that it uses a revolutionary system aimed not at competing with OPEC but with domestic oil producers.

The system was designed by Byron G. Merrell, a former Uintah County commissioner who is project manager for Oil Tech. He worked on the system for 15 years.

"When I started on the design of it, I knew that the competition for oil shale always had to be domestic drilling rigs," he said in a telephone interview from his home in Vernal.

"To drill for oil in the Rocky Mountain region is about a million dollars to get a hole in the ground." Then the cost is about $1 million more for pumps, casings and putting the well into production.

Additional costs in the Uintah Basin can include the expense of flooding to float oil from depleting fields and other types of secondary recovery systems, he said. Merrell calculated those costs and tried to design an oil shale retort that would be less expensive, resulting in oil priced lower than from a well, he said.

In the past, companies spent up to $400 million on an oil shale retort, according to Merrell. "Our unit will cost in the $2 million range and it will do 1,000 barrels per day."

The retort is modular, five sections stacked "like a child's building blocks," Merrell said. "It's a vertical, gravity-flow system," and the design can be mass-produced, he added.

It is hollow in the center, where electricity heats the shale. Heating a cubic yard of rock to the required 1,000 degrees uses about $7 worth of electricity.