All’s quiet on the oil shale front
An oil shale maxim set in stone may not be holding water in western Colorado these days.Oil prices have topped $40 – long understood to be the point at which there would be resurging interest in developing western Garfield County’s oil shale reserves.But so far no such resurgence appears to be occurring, even as interested local observers watch for signs of it.Parachute town administrator Juanita Satterfield said she’s had no indications of energy companies taking another look at the industry that once created an economic boom centered around her town.”We haven’t had anybody sniffing around yet,” she said. “We haven’t had any contact from any development or research companies.”Then again, she noted, the industry didn’t give a whole lot of indications last time of its intentions until it was already here.Western Colorado has seen a succession of oil shale booms and busts. The last boom ended in 1982, on what is known as Black Sunday. On May 2 of that year, Exxon announced the closure of its Parachute-based project, immediately throwing more than 2,000 people out of work. The closure had regionwide repercussions, as the economy and real estate prices suffered through much of the 1980s.The $40 ‘trigger point’The collapse of the oil shale industry followed a drop in oil prices, which earlier had soared during the energy crisis of the 1970s. The costly process of extracting oil from rock was no longer worth it. But what if energy prices rose again?Satterfield is among many who always have heard that $40 per barrel is what she calls “a trigger point” for renewed oil shale activity. But she doesn’t pretend to be an expert on the subject.”I have no idea what they base their exploration and development figures on,” she said. “I can’t outguess ’em. They’ve got people at the national level trying to do that.”All she and other local public officials can do is keep their eyes wide open, in case the industry decides to become active again.”I think our governments would be more prepared than they were previously,” she said.Governments dealt last time with the infrastructure impacts related to the arrival of a big workforce, along with the environmental impacts of oil shale development. And when the industry left, they faced the economic consequences of lost jobs and tax base.Garfield County Commissioner John Martin keeps such things in mind with oil prices high again, and the possibility of the oil shale industry returning.”We’ve got to be prepared if that takes place,” he said.oil shale: see page A2oil shale: from page A1He’s always been told that oil prices of $38 to $40 per barrel could set off renewed activity.And he’s fully aware of where the world’s largest deposit of oil shale is.According to the U.S. Department of Energy, worldwide oil shale resources total 2.6 trillion barrels. Of that, 2 trillion barrels are in the United States, and 1.5 trillion are found in the Green River formation of Colorado, Utah and Wyoming. Colorado’s shale is centered in western Garfield County and Rio Blanco County, in the Piceance Basin, currently a national hot spot of natural gas drilling.This spring, the Department of Energy convened a group of interested parties to produce a report titled, “Strategic Significance of America’s Oil Shale Resource.” It cites a looming shortage of conventional oil due to the kind of demand that has caused the current per-barrel price to go so high.The question for the industry may be whether oil prices are at a temporary high, or will stay high long enough for it to be worth the industry’s reviving oil shale operations, Martin believes.Quiet is goodDoug Dennison, the county’s oil and gas auditor, thinks that the rising oil prices might help justify a renewed look by the energy industry at trying to extract oil from shale.”That was always the hangup, was they couldn’t produce it economically,” he said.But if the industry is looking around now, “they are they’re really quiet about it, which I would kind of expect them to be,” Dennison said.Quiet is good, from the perspective of local government officials and the industry. Satterfield said the last boom was accompanied by a lot of national publicity before the industry was ready to do much actual production.”And then it didn’t happen. There were no jobs available. The people came and there was nothing here for them.””I don’t think it would be wise to try to do it that way again.” Jill Davis, a spokeswoman for the Shell Mahogany Research Project in Rio Blanco County, said Shell is trying to keep a low profile about the small-scale oil shale research project it has been working on there.Shell was not a big player in western Colorado’s oil shale boom 20 years ago and got out early, Davis said.Today, it doesn’t want to create a boom and is “trying to manage down expectations,” she said.Shell’s work is in a research stage, far from commercial production.”We make some strides and we take a step back every now and then,” Davis said.Its current research began in 2000, before oil prices headed so high. While Davis has heard western Coloradans speculate about the $40-per-barrel connection to oil shale development, she said acting based on such a price threshold isn’t in line with Shell’s philosophy on oil shale. That philosophy is about more than just economics.”We don’t look at today’s oil prices when we’re evaluating viability for our project,” she said.Shell takes a longer-term view, and Davis believes most oil companies do the same in considering oil shale.She said Shell is trying to move in a different direction from 20 years ago, toward more sustainable development. Economics, environmental considerations and technological capabilities all will determine the viability of oil shale development, she said.She said she has seen no signs that high oil prices are getting other energy companies interested in oil shale.”A lot of them are kind of just watching us, I think.”‘Virtually no interest’Steve Bennett, associate field manager for the Glenwood Springs Resource Office of the U.S. Bureau of Land Management, likewise hasn’t heard from the industry about oil shale, outside of Shell’s Rio Blanco project.”Down here there’s still virtually no interest. … We’ve had no contacts, really,” he said.The BLM very likely could be a principal regulator should the industry ever come back. It oversees the Roan Plateau, which lies northwest of Rifle and once was an oil shale reserve for the U.S. Navy.The BLM is currently working to release a draft management plan for the plateau and surrounding lands. Much of the focus is on to what degree it will allow natural gas drilling there. But it has been harder for the agency to address the possibility of oil shale development.The local planning effort comes as the BLM is working at a national level on regulations governing the leasing of oil shale lands.Meanwhile, a difficulty for the local office is that it has no idea how oil would be produced from shale.”We’d need to know more about the techniques and how they would do it before we could adequately analyze it,” Bennett said.Traditionally, companies mined the rock and heated it up in a retort process, consuming a lot of water and producing spent shale. Shell’s project is an attempt to slowly heat the shale underground rather than mine it, and then drill for the oil and gas produced from above-ground pads.For now, Bennett said, the BLM is trying to make some provisions for oil shale research tracts as part of its Roan Plateau plan. Also, any oil shale projects would be governed by general restraints of the plan, such as environmentally sensitive areas being declared off-limits to surface occupancy by oil and gas drilling or other such industrial-type activities.He envisions that any oil shale project proposed for the plateau would have to be addressed through a separate environmental impact statement, and an amendment to the plateau management plan.If Shell’s underground approach proves to be the future of oil shale development, as opposed to the traditional mining method, Bennett also thinks that development in the Piceance Basin could focus more on the northern part of the basin, where thick deposits are found underground. The deposits on the southern part of the plateau and around Parachute are thinner, he said. But past development focused on the Parachute area because the deposits were exposed at the surface along cliffs, making them easy to mine.Another kind of boomDennison said he thinks a large-scale mining operation would be much harder than it was 30 years ago.”There would be a big uproar over that,” he said.Already, western Garfield County is being hit by road and air quality impacts, as well as shortages of workers, hotel rooms and housing, due to the current gas drilling boom.”All those issues would be compounded even more if oil shale took off,” he said.If Shell’s method prevailed, it could result in a bigger shortage of drilling rigs than already exists, Dennison said. Shell has at least one ardent cheerleader in Bob Loucks of Grand Junction. Now retired, he was project manager in the 1970s and ’80s on a joint Piceance Basin oil shale project of Occidental and Tennaco. His book, “Shale Oil: Tapping the Treasure,” was published in 2002.Loucks would love to see a renewed interest in the oil shale industry.”We’ve got so much oil sitting out there that I’d hate to not see it used in a prudent fashion,” he said.At the same time, it will be important to protect the environment and local communities, he said.”We learned about all that in the ’70s,” he said.The Department of Energy produced its recent oil shale report in an effort to generate renewed interest in the resource, Loucks said.”And frankly, it hasn’t generated much,” he said.Loucks said he continues to write letters promoting oil shale, and even wrote Vice President Dick Cheney, asking him to consider oil shale as part of an overall energy policy. To Loucks’ knowledge, that hasn’t happened.In 1992, he said, Congress passed legislation that would have established a research facility aimed at identifying and proving the viability of technology to recover oil from shale. But money was never budgeted for the project.But Loucks continues to hope, if nothing else for the sake of future generations.”My premise is my granddaughters won’t have enough gasoline to run their cars, and we need to do something about that,” Loucks said.Contact Dennis Webb: 945-8515, ext. firstname.lastname@example.org
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