Interior Department approves reopening of Utah oil-shale mine

The federal government gave its approval Monday for the reopening of an oil-shale mine in Utah, one of the experimental works intended to boost domestic oil production on Western lands.

A top-ranking Interior Department official signed off on the project, and officials said an Alabama-based partnership, Oil Shale Exploration Co., would be offered a lease to work the federal land within days.

The approval from C. Stephen Allred, Interior's assistant secretary for lands and minerals, followed leases the government awarded in December for Colorado projects, where three oil companies plan to produce shale oil by heating layers of rock in the ground.

Utah has the only mining project where oil shale will be brought to the surface, crushed into gravel and fed into a furnace-like retort.

The White River mine near Vernal, 130 miles east of Salt Lake City, was abandoned by three major oil companies in 1985 when falling crude prices made shale oil uneconomical. Today's crude oil prices could make oil-shale development more practical.

"We're ready to put the lease on the table," James F. Kohler, solid-minerals chief for the U.S. Bureau of Land Management in Utah, said Monday.

Oil Shale Exploration Co., also known as OSEC, still needs to submit operational plans for its phased testing program.

As part of the lease, Kohler said the government would require OSEC to keep piles of spent shale in lined pits until officials can figure out how to dispose of the waste.

The alkaline tailings have some heavy metals and arsenic and could grow to enormous piles, but production will be limited for years before the company starts any large-scale mining.

One possible solution would be to dump the spent shale back into the mine, he said.

The oil shale reserves scattered in Colorado, Utah and southwest Wyoming are believed to contain a 100-year domestic supply of oil if it can be unlocked.

The White River mine reaches a relatively thin layer of oil shale 1,000 feet underground. The richest layer is only 58 feet, compared with zones 1,000 feet thick in Colorado that are closer to the surface, where heating the ground is thought to be more practical.

The Interior Department had already determined that projects in Colorado by Shell Frontier Oil and Gas Inc., Chevron USA Inc. and Midland, Texas-based EGL Resources Inc. would have no significant environmental impact.