Oil sands mine inching closer to reality in Uintah Basin

Published: Thursday, Jan. 17 2013 6:10 p.m. MST

SALT LAKE CITY — Environmental foes of what is poised to be the nation's first oil sands mining operation in the Uintah Basin are already challenging a state-issued regulatory permit related to their fears over potential groundwater contamination.

That matter is pending before the Utah Supreme Court, waiting for legal arguments to be filed on all sides.

An interim decision issued earlier this month by a separate state agency for a large mining operations permit may be challenged as well, but attorney Rob Duboc said staff at Western Resource Advocates are waiting to see the rationale behind the final order before making a decision.

"We know we disagree with the opinion," Duboc said Thursday. "But we have to wait to see what basis for appeal we may have in the findings issued by the board."

Duboc said it may be early to mid-February before the environmental advocacy organization makes a decision on challenging the mining permit for U.S. Oil Sands' operation straddling the border of Uintah and Grand counties.

"It is going to take a little bit of time to determine the fundamental basis for appeal," he said.

The state Division of Oil, Gas and Mining issued its interim decision Jan. 10 on the permit, which involves an initial 213-acre site in which U.S Oil Sands officials believe 2,000 barrels of oil per day will be produced.

Cameron Todd, chief executive officer of the Calgary-based company, said the PR Spring project occupies 5,900 acres of Utah school trust lands property where 200 exploratory wells show that 190 million barrels of oil can be successfully mined.

Project foes have fought the regulatory permits at every turn, but Todd said those permits have been able to weather the scrutiny because of the thoroughness of the process.

"This is not an unexpected result," he said, "but we have done our homework. This project has been scrutinized at every angle, and we have been working with regulators for the last eight years. We've had every question asked, and we've answered them."

Moab-based Living Rivers has argued that state water quality regulators violated their statutory duty when they they granted a permit to U.S. Oil Sands on the basis that the operation would have minimal impacts to groundwater in the region — because so little exists.

John Weisheit, the group's conservation director, said the state acted arbitrarily in both regulatory instances, especially as it relates to the potential harm to groundwater resources.

"So what other choice do we have but to fight it?" Weisheit said.

In their decision, Utah water quality regulators pointed to the lack of impoundments or process-water ponds on site, the recovery and recycling of water used in extraction process of bitumen, and the fact that processed tailings will not be "free draining."

In addition, hydrological tests showed the general absence of groundwater to a depth of between 1,500 feet and 2,000 feet. An administrative law judge who backed the issuance of the permit said the most compelling evidence demonstrating the absence of groundwater was based on 180 holes drilled in and around the proposed mine site of up to 305 feet in depth — more than twice the depth at which bitumen will be mined.

Living Rivers also objected to the mining permit because it only requires visual inspections of the mine site, not any subsurface analysis to determine any extent of contamination from d-limonene, a solvent the company will use to complete the separation process of bitumen, a thick tar-like substance, from marble-sized chunks of ore.

Mining regulators said there is no legal requirement under Utah law for subsurface monitoring, and 99 percent of the d-limonene, derived from citrus oil, will be recycled.

Todd said d-limonene has been falsely characterized as "toxic" by opponents, when it is actually EPA-certified as nontoxic, is biodegradable and commonly used in household products that include cosmetics.

The actual open-pit mine site will be the size of a typical Wal-Mart parking lot and be reclaimed, or re-covered, as the mining continues.

"This is not typical of any oil sands operation in that we will be returning the sand as we go," Todd said. "We will be covering the area with topsoil and revegetating. Many of these operations are very, very big and stay open for decades. Ours is quite modest, and you will only see a tiny fraction developed at one time."

Foes, he added, also like to compare the PR Spring project to what has been done in Canada.

"Most people think this is an extension of what has been done in Canada, but this is something that has never been done anywhere," Todd said.

"The technology of what is based in Canada is over 80 to 90 years old, originally developed when people were driving Model Ts," he said. "None of us should make a judgment on cars today based on Model Ts. No one should make a judgment on what will be done in Utah on what has historically been done many over many decades in Canada."

U.S. Oil Sands holds leases to 32,000 acres of Utah School and Institutional Trust Lands Administration property.

The PR Spring mining permit involves the 213-acre site on a plateau in the Book Cliffs region, which Todd said is targeted for starting production in mid-2014.

John Andrews, associate director and chief legal counsel for the Utah School and Institutional Trust Lands Administration, said the initial production phase will generate between $1 million and $3 million in revenue for the trust lands administration via royalties.

Todd said any expansion of the project beyond the PR Spring site, which was first initiated in 2005, would require additional rounds of regulatory permits from state agencies.

E-mail: amyjoi@desnews.com

Twitter: amyjoi16

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