GLENWOOD SPRINGS — The Royal Dutch Shell energy company has pulled the plug on its pilot oil shale development project in the Piceance Basin near Rifle, according to an announcement by the company on Tuesday.
Only a month ago, according to a story in the Denver Business Journal, the company had announced it planned to pursue its oil shale research while divesting itself of other oil and gas assets.
But late on Tuesday, company spokespeople were confirming that Shell would no longer be actively developing its three R&D (research and development) leases that had been touted by the industry as the most promising technology currently being pursued.
The company’s research has been focused on the idea of inserting heating rods into the deeply buried oil shale deposits in western Colorado to liquefy and extract an oil-like substance called kerogen. The company also was planning to surround the extraction area with a secondary set of probes that would freeze the enveloping lands and prevent contamination of nearby water resources by the kerogen.
Shell is the third big energy company to back away from the idea of developing an oil shale industry based primarily in the Piceance Basin, which covers parts of western Colorado, southern Wyoming and eastern Utah.
The first was Exxon, which in May 1982 shut down its oil shale mining and retorting project up Parachute Creek, putting more than 2,000 workers out of their jobs and prompting an economic recession that affected the entire state for years.
More recently, Chevron in 2012 decided to divest itself of its own R&D lease up Roan Creek.
Shell officials could not be reached for comment about the announcement.
According to statements attributed to Carolyn Tucker, a spokeswoman for Shell, the company had anywhere from 10 to 50 employees working at its pilot project, depending on what was going on at any given time, and the company is committed to ensure that its staff is not left high and dry by the decision to pull out.
In addition, Tucker is quoted as saying to reporters, the company has obligations such as reclamation of its project site that it must take care of before it can finally walk away from the project.
According to Denver Business Journal reporter Cathy Proctor, Shell is planning to sell off many or all of its oil and gas assets in Colorado, due to a drop in earnings reported in August and disappointing performance of some of its oil and gas businesses.
Glenn Vawter, director of the National Oil Shale Association, told the Post Independent on Tuesday, “I’m very disappointed, of course, because Shell has been a stalwart in the oil shale industry for decades. To have them leave is very discouraging.”
He said this may mean a change in the direction taken by companies involved in oil shale development.
“Ironically, we’ve always thought that when the multinational oil companies got involved, we’d see [oil shale as a marketable product] succeed,” he said. “But it may be the more entrepreneurial, smaller companies that do it. Maybe they’ll hang in there.”