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Petroleum News: Contenders picked for shale development

Contenders picked for shale development

The U.S. Bureau of Land Management narrowed the field of oil companies hoping to exploit vast oil-shale reserves in Utah and Colorado, government officials said April 10.

In a second elimination round, ExxonMobil and a tiny Utah company, Oil-Tech, were knocked out of the running for research and development leases to work BLM’s 160-acre parcels.

Exxon wasn’t prepared to commence research until as late as 2014 for a government program meant to expedite experimental works by this summer, said Jim Edwards, chief of BLM’s solid minerals branch in Colorado.

Oil-Tech failed to advance because of uncertainty over how it would work an abandoned mine and control furnace emissions and runoff discharges, he said.

That leaves four companies in contention — each hoping to win final environmental approvals to set up experimental works by midsummer. In Colorado, the surviving nominees are Shell Frontier Oil & Gas, Chevron Shale Oil, and EGL Resources. In Utah, Alabama-based Oil Shale Exploration was picked over Oil-Tech to work an abandoned mine.

Oil Shale Exploration plans to use a rotary kiln to bake shale oil out of a supply of 30,000 tons of rock left outside the White River mine. If the technology works, the company would use the mine to reach more oil shale deep underground.

In western Colorado, Shell is seeking approval to work three separate parcels of federal land, subject to environmental reviews. Shell is perfecting a method of baking shale oil from the ground using heating rods drilled into layers of rock, an alternative to mining.

The BLM advanced variations on that “in-situ” technique for Chevron and EGL Resources. Each is seeking approval to work a parcel of federal land that, like Shell’s, are inside Colorado’s Rio Blanco County.

The approval for experimental works will put oil companies in line for leasing larger federal tracts for commercial operations that could start as early as mid-2007.

—Associated Press

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