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Bloomberg: Shell Withdraws Oil Shale Permit as Costs Rise, Designs Change

By Joe Carroll

June 15 (Bloomberg) — Royal Dutch Shell Plc, the world’s second-largest oil company, withdrew a permit application for an oil-shale project in Colorado after costs rose and engineers decided to redesign some equipment.

The Hague-based Shell has no plans to abandon the project, spokeswoman Jill Davis said today in an interview. The application for a state permit to build a pilot oil-shale project on federally-owned land will be resubmitted after more data is available from tests on nearby privately owned land, she said.

Shell, Exxon Mobil Corp. and Chevron Corp. are spending $100 million a year developing methods to turn organic matter in limestone formations on the western slopes of the Rocky Mountains into crude oil. The so-called oil-shale deposits trapped beneath Colorado, Utah and Wyoming are larger than the combined reserves of Saudi Arabia and its 11 OPEC partners.

“By no means are we exiting oil shale,” Davis said today in a telephone interview from Denver. “This is a minor correction like you’d see with any large-scale research and development project. You make minor adjustments as you go along.”

Shell’s process calls for using heating rods buried underground to heat the organic matter for about four years until it turns into oil and flows to the surface through wells. The plan requires the construction of a subterranean wall of ice to prevent the oil from trickling away and to protect the heating rods from being swamped by groundwater.

Shell engineers in Colorado and at the company’s research laboratories in Houston are looking at ways to improve the performance and lower the costs for the freezewall and the heating rods, she said.

Irving, Texas-based Exxon Mobil Corp. is the world’s biggest oil company.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net
Last Updated: June 15, 2007 18:19 EDT

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