Colorado’s oil shale lures Shell

In its quest to remove oil from western Colorado’s shale, Royal Dutch Shell has been buying land and water rights in anticipation of what is likely to be a thirsty new industry.

Some officials worry that the demands of the oil-shale industry could drain every drop of the region’s remaining water.”On the upper end, we’re looking at potentially several hundred thousand acre-feet of water — more than people think is commonly available to develop in the Colorado River,” said Dan Birch, deputy general manager for the Colorado River Water Conservation District.

Shell and other energy companies have amassed tens of thousands of acres of cropland, ranches and open space — including a state wildlife area — to acquire water that would be needed to process the oil shale.

“We’ve been acquiring land and associated water rights for a long time,” said Shell spokesman Tracy Boyd. “We’re just situating ourselves so that when the time comes, we’ll have the resources we need.”

 

Private property

In the last year, Shell has: 

• Bought a property near Mack that included rights for water in the Colorado River and a 30,000-acre-foot reservoir.

• Bought a ranch from Houston oil tycoon Oscar Wyatt that holds water rights from the 1800s.

• Completed a land swap with the Colorado Division of Wildlife for water in the heart of the shale formation.

Boyd declined to detail how much water and land the company has acquired, and state and local government officials say they don’t maintain complete ownership records.

Water rights in Colorado are considered private property and can be sold separately from land.

The federal Bureau of Land Management estimates the shale formation in western Colorado could yield as much as 1.8 trillion barrels of oil.

Getting that oil, however, could require three times as much water to operate power plants, according to some estimates.

“The volumes are pretty enormous,” said Bart Miller, water-program director for the conservation group Western Resource Advocates.

“The net water requirements … were something in the neighborhood of 200,000 to 300,000 acre-feet annually,” Miller said. “To put that in context, that’s the consumption of about 2.5 million people.”

 

May prompt cutbacks

Energy companies will likely tap into previously unused water rights that will force longtime ranchers and even Colorado municipalities hundreds of miles away to cut back, said Birch. 

David Smith, owner of a cattle ranch near Meeker that has been in his family for more than a century, worries that diverting water for oil-shale production will harm places like the White River valley, where runoff and water that seeps into the ground benefits other users.

“We barely have been getting by, particularly in these drought years, with the amount of water that’s in the river — without taking anything out above us,” he said.

“But if they were to take out a large amount of water high in the valley, it would cut the whole river down,” Smith said.

Boyd said the water demands haven’t been determined because the technology hasn’t been perfected.

At its experimental project near Rifle, one of five oil-shale research-and-development efforts taking place on federal land, Shell is taking a novel approach by heating steel rods 2,000 feet underground to more than 700 degrees to extract oil from the rock.

The company also is establishing an underground “freeze wall” around the site, using a refrigerant in buried pipes to freeze water in the ground and create a barrier of ice that keeps water from infiltrating the site or chemical contaminants from leaving.

For now, Boyd said, most of the water is being leased back to the ranchers for traditional uses. Major production, he said, is at least 10 years down the road.

 

Environmental concerns

Still, environmentalist question whether there is enough water and energy to make oil shale viable. “I’m pretty skeptical,” said Elise Jones, director of the Colorado Environmental Coalition. 

“Oil companies have been working on trying to find this Holy Grail for decades and decades and decades, and still haven’t,” she said. “Then you look at just some of the potential impacts to water and climate and the incredible energy that might be required, and the costs may be too great.”

http://www.chron.com/disp/story.mpl/headline/biz/5769286.html