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Grand Junction Sentinel (Colorado): State questions Shell’s plan for oil-shale testing

By BOBBY MAGILL The Daily Sentinel
Thursday, May 24, 2007

GUNNISON — Several state agencies questioned Royal Dutch Shell’s Colorado mining permit application for the company’s proposed oil shale research test in Rio Blanco County, saying some aspects of the project could harm groundwater and water rights.

The Colorado Division of Reclamation, Mining and Safety must authorize Shell to test its in situ shale oil extraction process before the company begins work on the first of three oil shale research and development leases in Rio Blanco County.

Shell submitted its application to the state in April, and state agencies submitted their responses by May 16.

Shell’s oil shale test could harm existing water rights near the project because of its potential water consumption, wrote Assistant State Engineer Dick Wolfe. The company, he said, will need to create a plan to supplement area water supplies so the test won’t violate water rights by taking water from other people.

Steven Gunderson, director of the Colorado Water Quality Control Division, wrote that he is concerned the oil shale test could present serious groundwater quality problems.

Shell’s proposal fails to show that the company will adequately monitor groundwater for some forms of hydrocarbons after the project is complete, he wrote, adding that the company should monitor for contaminants such as napthalene, a common groundwater contaminant found near oil refineries.

Brian Macke, director of the Colorado Oil and Gas Conservation Commission, wrote that Shell’s proposed method of installing shale oil well casings could contaminate groundwater. He recommended Shell alter how its “casing strings” will be cemented.

Macke also criticized Shell for not adequately outlining how the company plans to measure the amount of oil and gas it produces during the test.

He said that even though the oil shale test is small, the volume of oil and gas it produces must be properly reported in order for the state to assess taxes and royalty payments.

Finally, Colorado Geological Survey Deputy Director Matt Sares criticized Shell’s proposal for a “freezewall.”

To protect groundwater, Shell plans to create an underground rectangular “freezewall” around the test site by using a closed-loop pipe system filled with ammonia. The system will freeze the water in the surrounding rock, preventing groundwater from penetrating the test site surrounded by the wall.

But, Sares wrote, when the wall melts after the project is complete, groundwater may be contaminated. Fractures in the rock caused by the freezing could allow high-salinity groundwater to mix with low-salinity groundwater, he said.

A Shell representative did not return a call seeking comment Wednesday.

Environmental groups were more critical of Shell’s proposal.

Bob Randall of Western Resource Advocates said Shell’s reliance on simulations and guesswork when estimating the test’s environmental impact inspires little confidence.

Randall cited Shell Vice President Terry O’Connor’s recent comments at a Grand Junction business conference this month as evidence that many unanswered questions remain about the test’s environmental impacts.

“If (the freezewall) test doesn’t work, water will flush into the project,” O’Connor said.

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

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