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The Denver Post: Shell shelves oil-shale application to refine its research

By Nancy Lofholm Denver Post Staff Writer
Article Last Updated: 06/16/2007 10:28:57 AM MDT

The front-runner energy company in the effort to unlock oil shale in northwest Colorado has slowed down its research by withdrawing an application for a state mining permit.

Shell spokeswoman Jill Davis said the withdrawal of a permit on one of its three oil-shale research and demonstration leases was done for economic reasons: Costs for building an underground wall of frozen water to contain melted shale have “significantly escalated.”

“We are being more cautious and more prudent,” Davis said. “Because of the nature of research you have challenges. With that in mind, it is taking a little longer to build a freeze wall than we planned.”

Davis stressed that the withdrawal of the mining permit does not lessen Shell’s commitment to continuing research at its Mahogany Research Project between Rangely and Meeker and eventually building demonstration projects on its federal leases.

“There is a very active program up there, and that will continue,” Davis said.

The delaying of the freeze-wall test means a plan to hire 600 new workers and build temporary housing for them will be on hold. The more than 40 Shell workers and 150 contractors working on the Mahogany project will not be affected.

Shell’s slowdown does not mean the Bureau of Land Management will delay plans to issue commercial leases as soon as 2008.

“There is no slowdown from our perspective,” said Celia Boddington, national spokesperson for the BLM.

“The BLM should realize there is no rush for commercial leasing,” said Bob Randall, an attorney with Western Resource Advocates. “There is a message for the BLM here.”

Shell is one of three companies awarded federal leases in Colorado to test new methods of extracting oil from shale rock by heating the rock underground rather than by mining it and cooking it above ground.

Shell’s method involves heating shale over a period of years and encircling it in a wall of frozen water to prevent groundwater contamination.

Shell has been researching heating methods on its property in the Piceance Basin for several years and is now in the process of freezing a test wall. Research on that wall will continue.

Davis said the freeze-wall test should be completed by 2009 or 2010.

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

Posted: Sat Jun 16, 2007 5:06 pm by John Donovan
Post subject: Back-tracking by Shell on oil shale

Royal Dutch Shell has for some time been hyping the potential of recovering oil and gas from oil shale in Colorado using technology developed by Shell.

For example, in an article written by Shell CEO Jeroen van der Veer which was published in the Financial Times newspaper on Wednesday 25 January 2006, he talked of “testing an environmentally sensitive way of unlocking the large potential of oil shale in Colorado using electric heaters to heat the rock formation and release light oil and gas?”

As recently as March 2007 Shell was still talking up the prospects of using the same technology. The following is an extract from information posted in March on

“Our quarter of a century investment researching Shell’s patented In situ Conversion Process has yielded exciting results. Shell carried out a small field test known as the Mahogany Demonstration Project South on its private property in Rio Blanco County, Colorado, using an in-ground heating process to recover oil and gas from the shale formation. On only a 30 x 40 foot testing area, Shell successfully recovered 1,700 barrels of high quality light oil plus associated gas from shallower, less-concentrated oil shale layers, determining our technological design works?”

Such encouraging news has obviously been beneficial to Shell’s share price particularly during the period following the reserves fraud when Shell had inflated its true hydrocarbon reserves by nearly a third.

So why the sudden back-tracking as reported today in The Denver Post?

Is it by any chance connected with the controversy surrounding Gale Norton, the recently appointed General Counsel for Shell Oil’s “unconventional resources” unit which includes oil shale development?

In May 2007, a Denver-based advocacy group called for a federal investigation of the relationship between former Secretary of the Interior Norton and Royal Dutch Shell’s oil shale operations in Colorado.

The group alleged that Norton may have used her influence at the federal agency to approve Shell’s leases in Colorado, followed by Shell hiring Norton as a general counsel.

Norton resigned from the Interior agency in March 2006. Shell was awarded the federal leases in November 2006. Shell hired Norton in December 2006.

The above incorporates information about the Gale Norton/Shell controversy reported in The Denver Post on 9 May 2007.

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