Oil shale forecasters saw 1.5 million people between New Castle and Grand Junction
Shock. Anger. Dismay. Disbelief.
Thousands of folks from Glenwood Springs to Parachute felt those emotions and more on Sunday, May 2, 1982. That’s the day Garfield County residents heard words they never thought they’d hear.
“Exxon has pulled out,” was the phrase repeated over and over that day.
The day quickly came to be known as “Black Sunday.”
Exxon was one of several energy companies who were creating the multi-billion dollar oil shale capital of the world in the Piceance Basin north of Parachute.
By 1982, the company had invested $1 billion in its Colony oil shale project. But on Sunday, May 2, it announced it was walking away due to escalating costs. Within the next decade, the last oil shale company had done the same.
The bust forced a 180-degree turn in the economic fortunes and planning scenarios of Garfield and Mesa counties.
For example, one government scenario released during the boom years envisioned 1.5 million people living between New Castle and Grand Junction.
After the bust, here is how it was described what a population of 1.5 million would have looked like.
“It would have been one strip city certainly from New Castle to Parachute, going back as far as the valley carried, and then into the forest lands,” said former Garfield County Administrator Roger Ludwig. “This valley is so narrow that to support that kind of development it would have taken every piece of land in the area.”
Ludwig and many others were interviewed in what became a local classic, historian Andrew Gulliford’s “Boomtown Blues: Colorado Oil Shale, 1885-1985.”
With 20 years of hindsight following Exxon’s announcement, it’s difficult to believe that people believed predictions like the following one from congressional oil shale hearings in the late 1970s.
By the year 2000, a hearing report said, northwestern Colorado housing needs would range from 25,000 to 313,000 new units per year, depending on oil shale production in the Parachute area.
Government and industry officials believed the forecasts. So did thousands of construction workers who flocked to Garfield County starting in the mid-1970s. And so did entrepreneurs, business owners and real estate speculators who joined the rush.
Belief in oil shale’s future came from two directions.
First, the Middle East OPEC oil embargo of 1973 drove home the point that the United States was dependent on foreign oil, and those supplies could be halted any time.
Second, after winning election in 1976, President Jimmy Carter signed a bill establishing the Synthetic Fuels Corp. to stimulate oil shale research and production and decrease U.S. dependence on foreign oil.
With Congress allocating $12 billion in seed money, Exxon, Union, Chevron, Mobil, Tenneco, Occidental and others announced plans to do something other companies had failed at since the 1920s – make a profit by cooking oil out of shale.
At one point in the boom, Gulliford says, the largest concentration of construction projects in the world was found in the Parachute area.
The population of Battlement Mesa, built by Exxon south of Parachute, was to have reached 25,000 by 1990 – nearly four times greater than Rifle’s population in 2000.
But the dreams turned to nightmares on Black Sunday, when Exxon announced it was pulling out. The extraction process was simply too expensive. Projected costs to build the Colony project had increased from $1 billion in the late 1970s to $5 billion in 1980.
And the process of extracting oil from shale consumed almost as much energy as it yielded. As the price of oil fell on the world market, the viability of oil shale crashed.
Overnight, 2,100 people directly involved with Exxon’s Colony project were unemployed. By comparison, that’s three times the current number of Roaring Fork Re-1 School District employees.
Exxon’s $85 million annual payroll evaporated. The current combined payrolls for the Re-1 School District and the Garfield County Re-2 School District is less than half that – $40 million.
Residents banking on the oil shale boom lost their homes and businesses in a cycle that took three years to hit bottom. In 1985 the number of foreclosures in Garfield County peaked out at 244, compared to 63 two years earlier.
The final death blow to the Colorado River Valley oil shale industry came in 1985, when Congress abolished the Synthetic Fuels Corp. Gulliford wrote, “Energy efficiency and the `moral equivalent of war,’ like so many other grandiose concepts imposed on the West by Congress, ended only in disaster and economic chaos.”
By 1991, when Unocal was the last company to shut down, local economies had started to turn around.
Today, populations are increasing from Glenwood to Parachute, and optimistic developers plan subdivision after subdivision.
A boom of sorts is going on, due in part to the construction industry, but that boom is measured in millions of dollars. The oil shale boom was measured in billions.
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