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Scott G. Winterton, Deseret Morning News
Oil drilling in Utah's Uinta Basin has created thousands of direct and indirect jobs and pumped millions of dollars into the local economy.

If all of Utah's known petroleum sources were developed jointly with Colorado's, the region would rival Saudi Arabia in crude oil production.

Just don't expect it to happen anytime soon, if ever.

Utah's geology is rich in reserves of conventional oil and gas, oil sands (formerly called tar sands) and oil shale — particularly the last. But many factors have prevented the state from becoming a major player in the oil field.

Utah's oil and natural gas production has climbed steadily for years. John Baza, director of the Division of Oil, Gas and Mining, noted that in 2004, the state's oil rigs yielded 14.7 million barrels; in 2005 it was 16.7 million barrels; in 2006, 17.9 million barrels; and for the first six months of 2007, production reached 12.7 million barrels, a rate that would put the year's total at 25.4 million barrels.

"Obviously, oil production is on the increase. I think the new well drilling that's going on is just kind of keeping up," he said. Much of a sharp increase in drilling is because of companies searching for more reserves as older sources are used.

"Drilling is still very active in the Uinta Basin," he added. And while the area had a slight increase over last year's pumping, "it's not what I'd call a real production boom."

Two years ago, a Michigan company, Wolverine Oil and Gas, reported a major oil strike in central Utah. Word quickly spread that it could be the harbinger of a vast new oil region 150 miles long. In 2005, some petroleum pundits predicted production could reach 500 million barrels.

So far, no discoveries much beyond the initial Wolverine strike have been reported.

"It represents a substantial part of the state's oil production profile," Baza said of the Wolverine field. That might be around 10 percent of Utah's total, but it's not an immense boom so far.

"I believe there's 10 or 11 producing wells in the immediate vicinity of the original discovery. So it's just a single field discovery to this point."

Perhaps half a dozen exploratory wells were drilled around this area, but he hasn't seen evidence of much from them. Still, Wolverine continues to drill new wells, and seismic exploration has been going on, which means "they're obviously seeing something that they like," Baza said.

In few parts of the state does the petroleum industry carry as much weight as the Uinta Basin, a vast region of northeastern Utah including Uintah and Duchesne counties.

According to Allen E. Isaacson, research analyst with the University of Utah Bureau of Economic and Business Research, 19.9 percent of the jobs and 34.8 percent of wages in the Uinta Basin of northeastern Utah are directly due to oil and gas exploration and production. When the multiplier effect is considered, such as cars sold to oil-rig workers, the figures jump to 49.5 percent of jobs and 60.1 percent of payrolls.

Total employment in the Basin is 19,852 jobs, with 9,835 directly or indirectly supported by petroleum. All wages combined in the region amount to about $745.7 million yearly; wages paid by oil and gas drillers and service companies, etc., amount to nearly $259.2 million; income from direct and indirect jobs derived from petroleum is $448.2 million.

Work tied to the petroleum economy is "just huge out there," Isaacson said.

"The Vernal High School is teaching night classes just to get people to graduate right now." A 17-year-old can graduate and jump into a $50,000 yearly job, he said.

"They're doing a lot of drilling right now. ... Most of the employment is actually not with the operating companies, you know, it's drilling the wells" or providing petroleum field services.

The Halliburton company, one of several service providers that are big in the Uinta Basin, offers support from hard-rock bits to lubricants, from cements to thermal sensors and sealant.

Once a drilling company gets a well up and running, Isaacson noted, "they need people from 30 other companies."

In 1999, 150 oil and gas wells were drilled in Uintah and Duchesne counties. In 2006, the number had jumped to about 900.

Of 240 wells drilled in Duchesne County that year, he added, "234 of them came in." Five were plugged and abandoned, and another was a service well used to inject water into the ground. "Of 660 wells in Uintah County, 624 came in."

Natural gas figures show a similar rise to those of oil. Baza said that in 2004, Utah production totaled 293 billion cubic feet; 2005, 313 billion; in 2006 the total was 356 billion cubic feet; and in the first six months of 2007, 271 billion cubic feet were pumped for the year — a rate which, if kept up the rest of the year, would bring the total to 542 billion cubic feet of natural gas.

Coal-bed methane, which is a form of natural gas, once was considered only a hazardous contaminant in coal mines because it increased the chance of an explosion. It was pushed out of mines by giant fans and released into the air, Isaacson said. But then operators began pumping coal-bed methane from a natural gas field. It became a commercial resource.

Meanwhile, production of coal-bed methane has "really increased dramatically in Carbon and Emery counties in the last 15 years," he said.

The two counties together produced 24 billion cubic feet of natural gas in 1997, counting coal-bed methane and ordinary natural gas. "In 2002 it was 105 billion cubic feet," he said. In 2006, the amount was around 98.5 billion cubic feet.

Isaacson added, "Carbon County and Emery County are now on the map in the oil and gas industry."

Oil sands

According to Isaacson, the Canadian province of Alberta has been producing a million barrels of oil per day from oil sands, a gummy bitumen substance.

"A Technical, Economic and Legal Assessment of North American Heavy Oil, Oil Sands and Oil Shale Resources," prepared in September 2007 by the U.'s Institute for Clean and Secure Energy, says Utah has more than half of the United States' oil sands. Proven reserves in Utah are about 11.6 billion barrels, while the total for the country is 22.5 billion barrels.

More speculatively, Utah has about 32.3 billion barrels and the country has 76.2 billion.

However, Canada has 1.7 trillion barrels awaiting development, with much of it in surface deposits, according to the assessment, one of whose authors is Isaacson. "Canada has one of the greatest oil reserves in the world," it adds.

Utah oil sands are being mined today on a small scale. Uintah County uses sands from Asphalt Ridge to pave roads. But the deposits have little other use so far. One reason may be that converting oil sands to crude oil takes a lot of water, usually unavailable in rural Utah.

"Definitely we'll never have the oil-sands industry Alberta has," Isaacson said. "We don't have the oil-sands deposits."

But oil-sands projects have been proposed in the past, and someday one may be developed.

Oil shale

Utah has a better chance of basing a "huge industry" on oil shale than tar sands, Isaacson said.

The "oil" actually is a waxy kerogen that impregnates rocks. If the rocks are crushed and heated, a liquid is given off that can be processed into oil.

The World Energy Council, an alliance of 90 countries, reported that Brazil, Estonia and Australia were producing shale oil in 1999. Several other countries have used the material in the past. In 1916 Estonia began retorting oil shale, and until recently shale oil has been an important part of the country's economy.

The council said more than 74 percent of the world's reserves are in the United States. "The largest of the deposits is found in the ... Green River formation in northwestern Colorado, northeastern Utah and southwestern Wyoming.

"The richest and most easily recoverable deposits are located in the Piceance Creek Basin in western Colorado and the Uinta Basin in eastern Utah," the council adds on its Internet site.

American attention to oil shale has grown and waned for more than 150 years. The OPEC oil embargo of 1973 and 1974, during which gasoline prices soared, renewed interest in commercial production.

The Interior Department began investigating how to commercialize the Green River deposits in 1967, according to the U.S. Geological Survey.

"The dramatic increases in petroleum prices resulting from the OPEC oil embargo ... triggered another resurgence of oil-shale activities during the 1970s and into the early 1980s," adds the USGS 2006 report, "Geology and Resources of Some World Oil-Shale Deposits." Federal leases in Utah, Colorado and Wyoming were offered through competitive bids under the Federal Prototype Oil Shale Leasing Program. Two tracts in Utah and two in Colorado were leased to oil companies.

No shale oil was produced on the federal tracts in Colorado, but Unocal Oil Co. developed oil-shale facilities on private land in Colorado.

Also, oil-shale experiments were carried out for decades on the Naval Oil Shale Reserve near Rifle, Colo. The Deseret News visited the reserve's Paraho plant, located at Anvil Points, in the early 1970s, finding it a bustling project with heaps of shale to be heated and a huge retort structure.

According to the Colorado School of Mines in Golden, the Paraho project later closed down but the pilot plant experimentally produced fuel from Australian oil shale.

The USGS report says three energy companies spent about $80 million on the Utah tracts. Several thousand barrels of oil were produced before the experiments ended.

Exxon began developing a huge oil-shale project near Parachute, Colo., but dropping oil prices rendered it uneconomical. Exxon ended the project on May 2, 1982 — a date infamous in Colorado as "Black Sunday." The Post Independent of Glenwood Springs, Colo., recently estimated that 2,000 people lost their jobs in a single day. In a searing dislocation, the local economy plummeted and expensive homes lost value.

The Unocal plant near Rifle, Colo., was the last major oil-shale project on the Green River Formation, according to the USGS. Construction began in 1980, $650 million was spent in the effort, and around 4.4 million barrels of shale oil was produced. But in 1991, it too closed. Today, with gasoline generally above $3 a gallon, interest in oil shale has been revived.

Michael Vanden Berg, a geologist with the Utah Geological Survey, said liquid petroleum is much more valuable than coal. It is worth more per British Thermal Unit, or unit of energy produced.

Hanging up oil-shale development, he believes, is not so much the price of crude oil as "coming up with a viable technology that is environmentally benign."

Environmentalists have long complained of potentially severe air and groundwater pollution from oil-shale projects.

Major investors are looking at restarting an oil-shale industry in Colorado, which has "a much thicker and richer deposit of oil shale" than Utah. There, Vanden Berg said, wells are producing oil from in-situ mining, in which the shale is heated underground.

Isaacson said about 85 percent of the United States' oil shale deposits are in Colorado, just over the state border near Vernal. Utah's share is 10 percent of the U.S. total.

Utah, Wyoming and Colorado together have oil-shale deposits with 1.5 trillion barrels of crude oil. Utah's portion is 150 billion barrels. If Utah and western Colorado oil shale were developed together, he said, the field "would rival Saudi Arabia."

Baza predicted that oil shale is a resource that will prove to be valuable eventually. "I wish I could tell you why there doesn't seem to be a strong business interest in it yet."

In June, the Bureau of Land Management issued a research development and demonstration lease to Oil Shale Exploration Co. for an experimental project about 45 miles southeast of Vernal. The lease is on the 160-acre site of the old White River Oil Shale Mine, which was abandoned.

The Bureau of Land Management once tried to close the mine but didn't complete the job because of a methane explosion. In June, when the lease was issued, company managing director Don Elcan said if the Shale Oil Exploration could produce oil at commercial levels and meet other requirements, it would be entitled to lease 4,960 adjacent acres for a commercial project.

In November, Elcan told Utah legislators the lease was effective July 1, 2007, and since then the company shipped 300 tons of product to Canadian laboratories for analysis.

"All three laboratories have designated the product as a medium sweet syncrude, which is fairly easy to refine into both diesel fuel and jet oil. So it is a very attractive product for refineries," he said.

Elcan added in six years, Oil Shale Exploration hopes to be producing 50,000 barrels per day.

Colorado boom busts

Richard Lamm was governor of Colorado during the last oil shale boom — and on Black Sunday, when it ended — recalled the disruptions caused by both. Oil shale projects in western Colorado were supposed to be on a stupendous scale. "What they were talking about at the time was like digging a new Panama Canal every six months," he said.

Developers wanted "the local municipalities to build the roads, the sewers, the schools, the city halls — and bond for them," Lamm said. One of his proudest accomplishments in his 12 years of governor is that "we did not fall for that siren song. We made them put up the money in advance."

"They told me at one time to get ready for half a million people in northwest Colorado. You can imagine what that does to our county commissioners and our city officials. ... All of this civic time and energy goes into planning, trying to accommodate, offset, mitigate these immense impacts."

Then one Sunday morning, after tremendous work to mitigate the impacts of the development, Lamm said he received a telephone call informing him "that the whole thing was being called off."

Today, new developments, including a couple of oil-shale projects, have changed the face of western Colorado, he added. A person could drive from Redwood Springs to Grand Junction and see developments, strip malls, sprawl, trailer parks. "What was this beautiful ecosystem (is) under just immense environmental strain."

In an era of concern about global warming and greenhouse gases, Lamm said, conservation and better vehicle fuel standards would save more oil than can be produced by "ripping up this state."

"I think that this is a Faustian bargain for Colorado."

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