Oil companies tell state there's enough water to develop oil shale

Officials from two oil companies told state regulators Thursday that the Uintah Basin has plenty of water to supply commercial-scale development of oil shale in Utah.

Laura Nelson, Red Leaf Resources Inc.'s vice president of energy and environmental development, and Gary Aho, Oil Shale Exploration Co.'s vice president of operations, told the Utah Board of Water Resources in a meeting at the State Capitol that Utah has sufficient water for developing Utah's portion of oil in the Green River formation.

The Green River formation spans Utah, Colorado and Wyoming, and is estimated to hold 800 billion barrels of recoverable oil locked in shale, about 70 percent of it on federal Bureau of Land Management property.

With a moratorium now expired on leasing public lands to oil companies for shale projects, a big lingering question is whether Utah's desert environment has enough water to support the people and processes it will take to tap the shale. The oil shale would need further refining, possibly in Utah, to become usable crude.

Nelson and Aho said their companies will rely on sources such as the Colorado, Green and White rivers, and possibly use water stored in Flaming Gorge Reservoir, which would require an agreement with the Bureau of Reclamation. The companies also would use a small amount of recoverable water that already exists in the actual oil shale and recycled water from current oil and gas operations in the basin.

"Our goal is to minimize water usage," Aho told the board members.

Both companies claim that, because of technological advances, they will need far less than the five to seven barrels of water that in years past has been needed to produce a barrel of crude oil. Now, the companies estimate that they will need one to three barrels of water per barrel of oil.

Nelson told the board that the question is no longer if commercial-scale development of shale will happen.

"I think the question is: When is this going to happen?" said Nelson, who until last year was Gov. Jon Huntsman Jr.'s energy adviser.

Utah-based Red Leaf uses a shale-production technology, which the company calls EcoShale, and aims to produce "low-emission 'green' diesel fuels from oil shale," according to the company's Web site. Huntsman is working with Red Leaf in that endeavor, the company said.

Nelson said her company is "really very, very close" to making the "leap" from research and development to at least a small commercial operation. She estimated it would take two years to establish a small-scale production and five years to have a large-scale operation that would produce 30,000 barrels of oil per day.

Red Leaf currently has access to more than 17,000 acres of state land in eastern Utah that Nelson described as "a lot of sage brush."