Feds put oil shale back on front burner

A hearing Tuesday on federal plans to unlock oil shale reserves in the Intermountain West was packed by small-time speculators, some of whom questioned whether today's technology would let them squeeze oil out of rock profitably.

The Bureau of Land Management is expected within weeks to award experimental leases on 160-acre parcels for oil-shale development while it studies a broader program for commercial operations by late 2007.

Tuesday's public hearing was the first in a series on the larger plan to unlock the world's largest oil shale reserves, which stretch across parts of Colorado, Utah and Wyoming.

But even among some people who applied for experimental leases there was skepticism that technology had advanced enough since 1982, when Exxon abandoned the last commercial effort.

"Thirty years later, it's the same old piece of gum," said Brent Fryer, a retired mechanical engineer who worked on Exxon's $1 billion western Colorado project and said refining waxy shale oil was still a problem.

Fryer claimed in an interview he knew how to perfect the tricky process of baking shale oil using a retort, or stack of furnaces. He is among 20 players who have applied for experimental oil-shale leases.

Tuesday's hearing was packed with small Utah players looking to ride oil shale's resurgence, but others urged caution. State water-quality officials warned of polluted runoff, and Jim Catlin of the Wild Utah Project urged BLM officials to carefully weigh the impact of mining and road-building on wildlife in remote areas of northeastern Utah.

"This is a fool's errand," said Steve Bloch, a staff attorney for the Southern Utah Wilderness Alliance. "It doesn't make sense to embark on a process that costs more energy than it can produce."

Others who didn't speak or publicly identify themselves included Bryon Merrell, a 63-year-old inventor who has claimed to have coaxed petroleum out of shale without gumming up the works of his full-scale demonstration furnace. That's the problem that has frustrated a century of experimentation.

Merrell, of closely held Oil-Tech Inc., is competing with Fryer and others for an experimental lease at the abandoned White River mine, where more than 30,000 tons of leftover oil shale were left unearthed decades ago.

Senior BLM officials said six of Utah's nine applicants for experimental leases are each asking for the mine and its leftovers. Another 10 companies, including Royal Dutch Shell PLC, applied for R&D leases in Colorado. One application was filed in Wyoming.