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Rocky Mountain News: Shell withdraws bid for state shale project permit

Dutch firm awaits results of testing in pilot program

By Gargi Chakrabarty,
June 16, 2007

Energy behemoth Royal Dutch Shell PLC withdrew an application for a state permit for its hyped oil shale project on Colorado’s public land.

The surprise move raises doubts about the viability of the energy resource and concerns by its competitors.

The Hague-based Shell says it has no plans to abandon the project, spokeswoman Jill Davis said Friday.

It will resubmit the application for the state permit to build a pilot oil-shale project after more data is available from tests on privately owned land, she said.

“By no means are we exiting oil shale,” Davis said. “This is a minor correction like you’d see with any large-scale research and development project.”

Last year, Shell received federal approval to lease three, 160-acre plots in Rio Blanco County to test its proprietary oil shale technology.

The company announced plans to drill 200 wells in the first plot beginning next year, and was mulling over building temporary living quarters for 600 workers near its drilling site. The status of those plans is unclear.

Randy Udall of CORE, a nonprofit energy company in Aspen, said Shell’s decision underscores the difficulty of extracting oil from oil shale in Colorado.

The United States holds more than 50 percent of the world’s oil shale resources – the equivalent of 2.6 trillion barrels of oil – of which 1.5 trillion barrels are recoverable. Most of the oil shale is in the Green River Basin in Colorado, Utah and Wyoming.

Oil shale provides just one-ten-thousandth of global energy, Udall said.

“Regarding oil shale, we have been in two modes: hype and hysteria,” Udall said.

Shell’s process calls for using heating rods buried underground to heat the organic matter for about four years until it turns into oil and flows to the surface through wells.

Two other companies, EGL Resources and Chevron USA, each leased one 160-acre federal plot for oil shale research.

“Shell was on the forefront of the technology, and its decision is a setback to all of us,” said Glenn Vawter, EGL’s manager of oil shale at EGL Resources. “We are certainly concerned.”

Rocky wire services contributed to this report.,2777,DRMN_23914_5588887,00.html

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