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BLM decision could make region the focus of oil shale research

A decision by the federal government could make northwest Colorado the central testing grounds for new oil shale development technologies – and eventually the site of several commercial projects as well.The BLM announced Tuesday that it has agreed to take a closer look at eight out of 20 proposals to test oil shale technology on public lands, and six of the projects would take place in northwest Colorado.In its decision, the BLM revealed a keen interest in efforts to extract oil from shale rock in situ, or in place. Three of the six Colorado proposals to do research, development and demonstration projects were made by Shell Frontier Oil & Gas, which is trying to pioneer an in-situ process. However, the BLM is considering letting three other companies that are pursuing in-situ technology try it out in Colorado. They include Chevron Shale Oil Co., EGL Resources and ExxonMobil Corp.Both Exxon and Chevron were heavily involved in the oil shale boom of the late ’70s and early ’80s. Exxon left more than 2,000 people without jobs when it pulled out of its Colony Oil Shale Project, based in Parachute, in 1982.This week’s action by the BLM is a first step toward possible commercial oil shale development on public land by companies whose proposals have been accepted for further consideration. All six Colorado proposals would take place on 160-acre test plots in southern Rio Blanco County, about 25 to 30 miles southwest of Meeker. However, those working on the 160-acre leases would be given a preferential right to 4,960-acre commercial leases on adjacent properties after more BLM review.Two more proposed projects that survived initial review would take place in Utah, and involve heating of mined oil shale. The BLM announced its oil shale research and development program in September. In a conference call with reporters Tuesday, BLM director Kathleen Clarke said oil shale could meet the nation’s current energy demands for more than 100 years.”Oil shale is a domestic resource with staggering potential,” she said.The BLM sought proposals that could advance technology, be economically viable, and have manageable environmental impacts. Of 20 proposals, it rejected those that didn’t meet the basic goals of the program, or comply with application criteria such as showing proof of investment capacity and the ability to post bonds associated with reclamation.The leasing was proposed for Wyoming, Utah and Colorado. But only one Wyoming proposal was submitted, and it was deemed ineligible for further consideration.The next step in the evaluation process is an environmental analysis of the eight projects. Clarke said only those that are environmentally and economically sound will be allowed to proceed.Tom Lonnie, assistant BLM director for minerals, realty and resource protection, said the environmental analysis would provide an opportunity to look at the potential impacts of so much of the testing potentially being concentrated in Rio Blanco County.Shell spokesperson Jill Davis said the company has shown in recent years its willingness to listen to the public and study the possible environmental and economic impacts of its work.”Certainly Shell is concerned about the cumulative impacts of our development,” she said.Dan Johnson, manager of government affairs for Chevron, said the company has operated in the Rangely area for more than 50 years, and has significant oil shale holdings in Garfield County.”One of the strong suits we think we bring to this is an awareness of the potential community impacts even on a research and development level,” he said.The BLM has begun preparing a programmatic environmental impact statement regarding commercial oil shale leasing. Meetings for the public to weigh in on that process are scheduled today at the Garfield County Fairgrounds, from 1-4 p.m. and 7-10 p.m.Garfield County Commissioner John Martin said the county will be involved in the BLM’s oil shale review process. He said it is important to look at oil shale as an energy source, but not to sacrifice the county in doing so.”We don’t want the boom and bust. We want a nice, easy increase and slow decline,” he said.Shell hopes its in-situ process will have fewer environmental impacts than traditional mining and heating of shale. The process involves heating the shale underground and then drilling wells to bring oil to the surface.One of its test leases would be used to do a pilot project using its current research. A second would test various types of heaters in a lease area containing shale with varying characteristics, Davis said.A third would test a patented process to recover nahcolite – basically baking soda – mixed in with oil shale, and then develop the oil shale. If it works, it would open up more federal lands with richer shale resources to development, Davis said. The BLM doesn’t want to waste the nahcolite in developing the oil shale, and Shell needs to see if the nahcolite would create technical problems for shale development, she said.Johnson said Chevron has had a lab team working on an in-situ process for several years. The status of technology and the price of crude oil have brought Chevron to the point of wanting to test its process, he said.He declined to discuss details of the proprietary process. BLM officials say all the Colorado proposals involve heating shale underground.Representatives of Chevron, Shell and ExxonMobil all said they were happy about the BLM’s decision to further consider their proposals.”ExxonMobil is one of very few companies which has the world-class technology and financial strength to pursue this significant yet challenging resource,” said L.A. D’Eramo, an ExxonMobil spokesperson.Johnson said Chevron is pleased about the speed of the BLM’s decision. It wasn’t expected until February, he said.The BLM hopes to issue the small-scale leases by early summer. Congress, in last year’s energy bill, directed it to complete commercial leasing within 18 months.


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