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Feds collect reaction to oil shale development; final decisions to be made by October

By Paul Foy

Associated Press

Published: Thursday, May 3 2012 4:43 p.m. MDT

Mark Ward, senior policy analyst and attorney for the Utah Association of Counties, speaks during a press conference Tuesday, April 24, 2012, about a proposal by the U.S. Bureau of Land Managment to reduce the amount of public land it will lease for development of oil shale and tar sands. Thirteen counties in Colorado, Utah and Wyoming expressed their opposition to the BLM's actions.

Geoff Liesik, Geoff Liesik, Deseret News

Enlarge photo»

SALT LAKE CITY — The federal government is closing a public comment period on plans for oil shale development that have sharply cut public lands available for research and development projects.

The Bureau of Land Management has tentatively decided to lease about 460,000 acres of oil shale deposits for research and demonstration projects, down from 2 million acres the Bush administration planned to offer across Colorado, Utah and Wyoming.

Oil-friendly interests are complaining that the BLM is making little land available with too many regulations. The new plans calls for opening another 91,000 acres for tar sands development, down from 431,000 acres the Bush administration planned to offer.

The government will make its final leasing decisions by Oct. 18, said Mitchell Leverette, division chief of solid minerals at the U.S. Bureau of Land Management's Washington office.

First, the BLM will sift through what the National Parks Conservation Association says is more than 100,000 public comments. BLM officials said they haven't counted them. The comment period will close Friday.

Environmental groups say a century's worth of trying to wring oil from rock has never proved economical, and new efforts will only ruin public lands. The National Parks Conservation Association said the "vast majority" of comments support BLM's more cautious approach.

"It doesn't make sense to develop on a large scale and put our national parks and recreation economy at risk when oil shale and tar sands development have yet to be proven economically viable," said David Nimkin, the Southwest regional director for the National Parks Conservation Association.

Several oil companies took out 160-acre government research plots years ago, but only one is actively working a demonstration project.

Shell Exploration & Production Co. is experimenting with an effort to bake oil shale in the ground and suck out oil with pumps. Shell holds three federal research and development leases in Colorado but is running the demonstration on its own land.

"We are still taking our cautious research approach," Shell Oil Co. spokeswoman Kelly op de Weegh said Thursday. "We have proven our in-situ conversion works on a small scale and that a freeze wall can be established around it as a potential means of protecting the groundwater."

Chevron Shale Oil Co. and American Shale Oil each hold another research lease in Colorado. In Utah, a partnership sold its federal lease to an Estonian concern doing business as Oil Shale Exploration LLC. That company controls an old shale mine in Utah that was never fully developed. Other companies are said to be seeking new federal leases for oil shale research.

"The technological stuff is hard enough," Alan Burnham, chief technology officer for American Shale Oil, told BLM officials at a March hearing held in Silt, Colo. "We just don't want a lot of unnecessary regulatory hurdles."

A Utah company, Red Leaf Resources, has said it is moving to produce oil shale on state trust lands.

Red Leaf's timeline called for it to start working in eastern Utah this year, according to a presentation that Laura Nelson, the company's vice president of energy and environmental development, gave to a University of Utah conference a year ago. Nelson didn't return a voice message left by the AP on Thursday.

Oil shale has always been a tough nut to crack. The rock contains fossilized algae, an immature form of oil that never received enough heat or pressure to produce liquid crude. It must be heated above 500 degrees to release a petroleum-like liquid.

The West's oil shale deposits are believed to contain more than 1 trillion barrels of oil — four times the holdings of Saudi Arabia, according to government and industry estimates. The U.S. Energy Department has said it will take a "massive capital investment" to unlock Western oil shale.

Even then the payback is uncertain.

Legend has it that American Indians and pioneers used oil shale to fuel campfires. A visitor information site in Parachute, Colo., showcases the tale of a homesteader who built a fireplace out of shale only to burn down his house when he lit a fire for a housewarming party.

Oil shale had a moment of glory briefly until 1982, when plunging oil prices forced Exxon to shut down a project in western Colorado, lock the gates and put 2,200 people out of work.

In recent days, Leaders in Grand Junction, Colo., invoked Exxon's so-called "Black Sunday," saying federal policy should avoid another bust. The Grand Junction City Council and mayor filed their comments with the BLM.

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