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The Daily Sentinel (Colorado): Groups seek cash to study water supply for industry

By BOBBY MAGILL
Thursday, February 08, 2007

Two northwest Colorado water basin roundtables are expected to ask the state for money to study how much water may be available for energy development in the region.

That critical question was overlooked in 2003 when the state took on the Statewide Water Supply Initiative, or SWSI, a water needs assessment and availability study that examined the state’s water supplies basin by basin.

The water supply report, issued in 2004, acknowledged it didn’t account for the water needs of potential natural gas and oil shale development throughout the state, said Chris Treese, external affairs officer for the Colorado River Water Conservation District.

When the study was being developed, commercial oil shale development wasn’t foreseen, he said.

Now, faced with questions about how much water the natural gas and oil shale industry and related power plants will need, Treese said, the Yampa and White River Basins Roundtable and the Colorado River Basin Roundtable are expected to ask the Colorado Water Conservation Board in March for $300,000 to get some answers.

The state, he said, needs to figure out if it needs to reserve water for the energy industry.

“We want to know how big is the potential problem and what is the need,” he said.

The problem all along, he said, is that oil shale extraction technology is still being developed, so it’s difficult to guess how much water the industry will need.

Historically, he said, the oil shale industry needed between one and five barrels of water for every barrel of oil it produced. Some in the industry say they may have a zero net water demand, he said, and others say oil shale extraction may produce water.

Quantifying the energy industry’s water needs and figuring out how much water is available to the industry is “absolutely critical,” said Cathy Kay of the Western Colorado Congress. “That’s something you should have done first before you went into the oil shale business.”

She said that even if the industry uses one barrel of water per barrel of oil it produces, that’s still millions of barrels of water the industry will need.

“We don’t know what they’re going to do to the water, how they’re going to clean it up,” she said. “There will definitely be drawdowns.”

But most importantly, she said, she is concerned the potential for the industry to use up all the water that’s left in the Colorado River Basin could prevent other industries from locating in Colorado.

Jill Davis, spokeswoman for Royal Dutch Shell, one of three energy companies who are conducting in situ oil shale research in the Piceance Basin, said it’s too early to tell how much water commercial oil shale production will consume; however, “I think the (water needs) assessment make sense from a planning standpoint from the communities,” she said.

“We don’t know what our water demands will be for a commercial project,” she said. “We couldn’t supply those numbers to the assessment.”

She said Shell must first decide if it’s going to go ahead with commercial oil shale production, a decision the company won’t likely make until it finishes its work on its three Piceance Basin research and development leases. And it must decide how big such a commercial project might be before it can guess how much water it might use.

A 2005 RAND Corporation report to the U.S. Department of Energy on the prospects for oil shale development in the region says in situ oil shale production should reduce the amount of water used compared to conventional oil shale production, but water-use estimates can’t be made until the technology improves.

Water availability in the Piceance Basin shouldn’t be a problem for oil shale companies, the report stated. Based on 1981 hydrological data, the report estimated that enough water exists in the basin for oil shale companies to produce 3 million barrels of oil daily.

Shell already is purchasing senior water rights for its oil shale projects, recently spending $14 million for the YZ water right on the White River in Rio Blanco County, Davis said.

She called it a “very senior industrial water right.”

“It’s our intention to only have industrial rights because we want to work in combination with the (agriculture community),” Davis said, adding the company doesn’t want the state to build reservoirs to supply water for oil shale development.

Bobby Magill can be reached via e-mail at [email protected].

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