Grand Junction Sentinel (COLORADO): Re-energizing the search for oil shale

Sunday, June 04, 2006

Oil shale is fast emerging as a strategic fuel of choice by a committee studying domestic sources of energy, but the resource still has more question marks attached to it than periods.

The Unconventional Strategic Fuels Task Force, established in the Energy Policy Act of 2005, is preparing a draft report that highlights oil shale as the key domestic source of fuel for the nation, said Craig Meis, a Mesa County commissioner who represents Colorado’s local governments on the task force.

Oil shale is “certainly the largest potential resource in the lower 48 states,” Meis said.

The task force includes two representatives each from Colorado, Utah, Wyoming, Kentucky and Mississippi, as well as representatives of the departments of Defense and Interior, who will report to Congress and the president.

The estimated 1 trillion recoverable barrels of oil hidden in the marlstone, or oil shale, of the Green River Formation in the Rocky Mountain West got the task force’s attention, as well as the attention of Congress in the 2005 Energy Act.

The legislation created a federal research and development leasing program for oil shale and directed an environmental study on the impacts of commercial leasing to be completed in 2007.

But for all its promise of an independent, secure energy supply to the United States, questions as imposing as the rugged Bookcliffs in which it’s buried still surround oil shale.

In the time since the last oil shale bust in 1982, when the collapse of oil prices toppled oil shale development in western Colorado, Shell Exploration and Research Co. has quietly tried its keys on oil shale. The company still stands at least four years from being able to boast it has unlocked shale’s commercial potential.

Other companies fresh in the game are experimenting with ideas, many of which have been denied by the federal government for testing under a new research and development leasing program on public land in the West.

Disappointment abounds, even among some of oil shale’s most devoted supporters.

“Despite all the attempts to develop a shale oil industry in the U.S. over the past 100 years, the fact remains that no proven method exists for efficiently removing the oil from the rock,” said Bob Loucks of Grand Junction, former manager of Shell’s shale oil project in the Piceance Basin and the author of the book, “Shale Oil: Tapping the Treasure.”

“There are a number of candidate processes possible, but none has demonstrated a practical capability to produce oil,” Loucks submitted to the Senate Energy and Natural Resources Committee, which conducted a field hearing Thursday in Grand Junction to discuss oil shale development.

Technology, however, isn’t the only barrier to making oil shale into a working proposition. A list of issues yet to be explored includes:

water quality and availability;

air quality and energy availability;

and labor supply and economic impacts.

Environmental worries have fired up opponents who question whether there is enough water to meet domestic and industrial uses, to say nothing of the needs of fish and wildlife.

Officials with Shell still have no exact sums of how much water their oil shale extraction process will require.

As an early guess, said Stephen Mut, CEO of Unconventional Resources, a division of Shell, it would take two to three barrels of water to create a barrel of oil during Shell’s patented in-situ (in-ground) process.

Estimates from a RAND Corp. report released in 2005 say two to five barrels of water are needed for retort (conventional) extraction of one barrel of oil shale.

That kind of water may not be available along the parched Colorado River Basin, where some water experts have asserted Colorado may already be using its full portion from the river that seven Western states share.

Even if the required water is available, another impact is to users downstream from oil shale operations in Rio Blanco County, such as farmers in the Grand Valley. There are ongoing salinity issues, too.

Besides water, others wonder if enough power will be available to charge oil shale projects in the first place. Shell is currently using electric power as the source to heat rock underground to 700 degrees Fahrenheit and keep it that hot for three years, thereby melting the rock to release shale oil as a vapor. The shale oil will flow to the surface, where it will be condensed and refined.

The 2005 RAND study estimated that a commercial-scale oil shale plant for Shell would require the construction of the largest power plant in Colorado history, costing about $3 billion, and would consume five million tons of coal each year and produce greenhouse gases in the process.

Because Colorado’s electricity comes primarily from coal-fired power plants, officials at Shell are currently calculating how much energy would be involved with their oil shale process.

“We’re still in a research mode here and need to validate these numbers, but we’re measuring that one unit of electricity should create about three units of oil,” said Terry O’Connor, a Shell vice president for external and regulatory affairs.

Steve Smith, assistant regional director for The Wilderness Society, said the ramifications of using coal-fired electricity to produce oil shale should be more closely studied before any decisions are made on commercial production.

He also urged further study of air quality before oil shale proceeds to the commercial scale.

“There have been no studies on air quality related to oil shale since the 1980s,” Smith said.

Ronald Klusman, professor emeritus of chemistry and geochemistry at the Colorado School of Mines, was active in oil shale from 1974 to 1984, and he said local air quality in Rio Blanco County was a concern.

Klusman said companies may not realize the unique landscape and weather patterns located in prime oil shale area between the Flat Tops Wilderness to the east and Dinosaur National Monument to the north could lead to a grayish-blue or yellow haze “all the time” from industrial oil shale activities.

“I would hate to see companies not pay attention to that,” he said. “We will need tight pollution controls to keep that from happening.”

Klusman also worries about infrastructure and population increases. The work force needed for oil shale on a commercial scale would be “enormous,” both during construction and operations, he said.

Where the workers will live, buy groceries, drive their trucks and live their everyday lives is still, at best, being discussed at a conceptual level, according to local government leaders.

Officials in Garfield, Mesa and Rio Blanco counties already are struggling under the burden of an existing natural gas boom, trying to deal with the associated effects in a timely manner. Housing is at critical levels, and workers’ “man camps” are being set up to house company employees.

Some companies are struggling to find enough qualified workers in the area to fill vital jobs in natural gas.

“Many of our communities are stretching to meet current needs,” Garfield County Commissioner Trési Houpt said.

Clamoring for federal attention, and money, if oil shale is to move forward is a high priority, says John Loschke, mayor pro tem of Parachute, who was in Parachute for the last bust and has watched the natural gas boom overtake the town once.

He’s still waiting for federal officials to talk about the last time oil shale brought his community to its knees.

“Is somebody going to talk to us about what happened here?” Loschke asked.

Parachute sits at the mouth of Piceance Creek, where the richest oil shale deposits lie and where the bust hit hardest last time.

This time, most of the oil shale activity is centered in Rio Blanco County, population 6,500. Most of the county’s residents live in two towns.

“I’m scared for Meeker and Rangely,” Loschke said.

In order to save the communities affected by oil shale from undue hardship, discussions surrounding how best to develop oil shale, and fund it, are rampant.

Thursday’s Congressional hearing in Grand Junction was the most formal of those discussions so far, but many hope it won’t be the last.

“Simply put, what we don’t know vastly outweighs what we do know,” said Chris Treese, head of external affairs for the Colorado River Water Conservation District in Glenwood Springs, the policy entity for the Colorado River, which will likely supply oil shale operations in Rio Blanco County with water. “Questions need to be answered to avoid the mistakes of the past.”

Gary Harmon can be reached via e-mail at [email protected].

Sally Spaulding can be reached via e-mail at [email protected].

Grand Junction Sentinel, CO

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