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Denver Post: Oil shale’s lure beckons wiser Western Slope

JOB LOSSES AFTER 1982 BUST STILL VIVID

By Nancy Lofholm
Denver Post Staff Writer
Article Last Updated: 05/02/2007 01:53:52 AM MDT

Grand Junction – The promise of oil shale collapsed in thousands of pink slips and many more broken dreams and fortunes on May 2, 1982 – a day known here as Black Sunday.

On the 25th anniversary of the oil-shale industry bust, the resource still dangles the enticing prospect of a new domestic source of fuel. And once again, there is a concerted push to get at it.

At least eight companies are working at oil-shale research using heaters, radio waves and conventional mining in the search for cost-effective and environmentally acceptable ways of tapping oil shale.

The Bureau of Land Management issued five federal research and demonstration leases. One more in Utah got a preliminary green light this week.

“If it isn’t going to fly now, it may not fly,” said Dr. Jeremy Boak, project manager of the Colorado Energy Research Institute at the Colorado School of Mines. “Everyone seems to be being pretty careful. It is not the sort of rosy scenario that came out the last time around.”

The Piceance Basin, where much of the richest oil shale is buried, has been an energy-supply tease since the early 1900s. At that time, energy pioneers began trying to access the fuel in “the rock that burns.” The rock contains a material called kerogen that releases petroleum products when heated.

But pulling out the estimated 31 trillion cubic feet of oil shale under Colorado, Wyoming and Utah is not that easy even when crude oil prices have climbed to about $65 per barrel. No technology has yet been proved on a commercial scale. And an area burned badly by the bust is still skittish.

Oil-shale towns suffered near riots and there was talk of bringing in the National Guard when it was announced in 1982 that Exxon was pulling out.

The company sank $5 billion into the Colony Oil Shale project, a mining and cooking operation that technically never worked well. Oil prices sank and even government subsidies did not make continuing the project economically feasible.

That announcement immediately put 2,200 workers out of jobs, and in a domino effect, severely affected another 7,500 workers in support businesses.

Grand Junction lost 10 percent of its population and was hit with more than 4,000 foreclosures over the next five years. Battlement Mesa – a community being built from the ground up for a planned population of 25,000 – was suddenly a near-ghost town.

Three days after the bust, the Rifle Telegram printed an editorial declaring, “oil shale will emerge again.”

“It would not surprise me to see oil shale come back in a major way,” said Rifle Mayor Keith Lambert as he chuckled over the prescient prediction.

The 2005 Energy Policy Act calls for the BLM to commercially lease oil- shale reserves as early as 2008. A federal task force created by that act is expected to release a report soon on how to expedite oil shale development.

But state and local officials are urging caution. Gov. Bill Ritter’s administration is pushing for more time for the state to grapple with the socioeconomic impacts of oil-shale production.

Environmentalists are also calling for a slowdown.

“They (federal agencies) see the Piceance as this massive wasteland of the West,” said Cathy Kay, oil-shale organizer for the Western Colorado Congress. “I’m sick and tired of being told it’s the Saudi Arabia of America. It’s not.”

Kay said oil shale, unlike conventional oil and gas, requires massive amounts of water and power to tap it.

Glenn Vawter, an executive on the Colony Oil Shale project before the bust who now works with EGL Resources researching a new in-the-ground oil-shale extraction method, said energy companies aren’t going to sink billions into oil shale without good indications that it will work this time.

“I’m not worried about another Black Sunday,” Vawter said. “We have learned not to do too much too fast.”

Staff writer Nancy Lofholm can be reached at 970-256-1957 or [email protected].

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Who’s digging where

Companies and individuals currently working on oil-shale projects

Royal Dutch Shell: Researching an “in-situ,” or in-the-ground, method of heating oil shale at the Mahogany Research Project in Rio Blanco County. Shell is putting electric heaters into drill holes to gradually heat kerogen over a period of years. A freeze wall is being constructed around the heated area to sequester ground water.

EGL Resources: Plans to also use in-situ heating of the lowest layers of oil shale in northwest Colorado. They plan to use gas-powered steam boilers or electric heaters in wells that are drilled horizontally at the bottom of oil shale deposits. Groundwater would be protected by pumping it out of the ground.

Chevron: In a method developed by teaming with Los Alamos National Laboratories, Chevron proposes to drill wells and fracture oil shale by injecting carbon dioxide gas and possibly explosives. Hot carbon dioxide would circulate through the fractured shale to decompose the kerogen. Chevron’s method does not anticipate any groundwater mixing with the fractured rock.

ExxonMobil: Proposes to use fracing in horizontal wells and to hold the fractures open with electrical conductors that would work like a giant toaster to heat the kerogen. ExxonMobil was turned down for a government research and development grant and will do its research at its Colony Project site near Parachute.

Oil Shale Exploration Company: Plans to reopen the shuttered White River oil shale mine near Vernal, Utah. Shale will be mined conventionally and initially sent to Canada for a heating and processing method called retorting. Crushing and cooking the oil shale above ground would later be done on site.

Red Leaf Resources: Plans to test a method called Ecoshale on its own land outside Vernal. Shale will be mined and turned into rubble before the kerogen is melted out in a surface retort powered by gas produced in that area. The mineral-laden tailings would be contained in capsules.

Raytheon and CF Technology: Working on a process to lower radio-frequency antennas into wells to heat the kerogen. Fluids would then be pumped into the ground to dissolve the petroleum. Production would happen in months rather than years. This technology would be sold to other companies.

Brent Fryer: This former Exxon engineer was turned down for a research and demonstration permit for a surface mining method that involves an above-ground processing method he calls “black box pyrolysis.” Fryer, who lives in St. George, Utah, is moving ahead but won’t say what that proprietary method entails.

Posted Comment by John Donovan

The question is can the public trust Big Oil to respect and protect the environment in the quest for extracting oil shale on a commercially viable basis. Their track record does not inspire confidence bearing in mind that we have already witnessed the Exxon Valdez oil spill environmental disaster.  BP is currently in the dog house because of huge oil leaks in Alaska due to badly maintained pipeline and the Texas City oil refinery explosion resulting in multiple deaths and injuries. 

The track record of Royal Dutch Shell in terms of integrity and the environment is also suspect to say the least, bearing in mind the tragic explosion at a Shell Oil refinery in Norco in which six people lost their lives,  Clean Air Act violations, repeated environmental infringements in Louisiana, a pipeline rupture in Washington State which resulted in an explosion and more deaths, repeated multimillion dollar fines for groundwater contamination, more fines for unauthorised venting and flaring of gas. Details can be found on Wikipedia at http://en.wikipedia.org/wiki/Controversies_surrounding_Royal_Dutch_Shell

Shell has also been guilty of causing hellish pollution in Nigeria for decades, extracting some $30 billion in cahoots with corrupt Nigerian governments, while leaving the local population to live in abject poverty. The following link is to a leaked Shell confidential internal report in which Shell admits that its operations in the Niger Delta have fuelled corruption.

http://www.shellnews.net/2004%20Documents/peaceandsecurity/peaceandsecurityinthenigerdeltawebpage.htm

The fact is that oil giants such as Exxon, Shell and BP are masters of spin and exert huge influence with government.  However, in view of the uncertainty of supply from foreign sources and dwindling global reserves, there seems little choice but to permit Big Oil to pursue the goal of commercially viable extraction of oil shale, but please only with strict oversight.

Posted by John Donovan, co-owner of the website http://royaldutchshellplc.com/

royaldutchshellplc.com and its also non-profit sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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