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Grand Junction Sentinel (Colorado): Experts: Withdrawal no reason to doubt ShellÂ’s oil shale technology

By BOBBY MAGILL The Daily Sentinel

Thursday, July 05, 2007

Oil shale experts say their confidence in Royal Dutch Shell’s in situ oil shale extraction technology was not shaken when the company announced last month it withdrew a state mining permit application for its long-awaited oil shale test.

“I don’t think it has implications,” said James T. Bartis, lead author of the 2005 RAND Corp. report on the prospects for oil shale development in the United States. “What they’re doing is they’re acknowledging things are complicated and they need to do their homework first.”

Shell’s oil shale test was expected to be conducted on the first of three 160-acre research and development leases on public land in Rio Blanco County. The company said it has no plans to abandon its oil shale program and it needed more time to test its process before moving onto public land.

Shell spokeswoman Jill Davis said Monday the company pulled its permit application for a variety of reasons, including higher-than-expected labor and materials costs and problems drilling its “freeze wall.”

Shell plans to isolate the groundwater at its oil shale test site by using a closed-loop piping system filled with ammonia to create a frozen wall of groundwater that would prevent groundwater outside the site from penetrating the zone where shale oil will be extracted using heaters drilled into the ground.

“There are no problems with the freeze wall test,” Davis said. “We want to further mature the containment method and further develop the heater technology prior to doing the demonstration project on federal acreage.”

That just means Shell is being careful, said Dr. Jerry Boak, project manager for the Colorado Energy Research Institute at the Colorado School of Mines.

“This is a slowdown, not a shutting down at all,” he said. “It really doesn’t change things a whole lot. We expect occasional delays. Shell has often said there’s a schedule when things go right, and we know that never happens.”

Bartis said his confidence in Shell’s technology has not wavered, and there is no indication Shell may be walking away from oil shale production in Colorado.

What’s more, he said, oil shale production will still take root here even if Shell’s technology doesn’t work, he said.

“There’s enough alternative approaches I’m optimistic that at least one will be successful,” Bartis said. “A few approaches use electricity for heating, other approaches (use) liquids for heating up shale. Shell is the leading company in this area.”

Shell’s decision to put its oil shale test on hold is being hailed by the state as “careful and prudent,” Colorado Department of Natural Resources Director Harris Sherman said Monday.

“I think it’s too early to know whether Shell’s technology and other in situ technology will be used in commercial development,” he said. “Shell’s position confirms the importance of getting the results of the (BLM’s oil shale research, development and demonstration) program first before you proceed with the commercial program,” including finalizing an environmental impact study on it.

Shell’s caution is smart, said Andrew Gulliford, a faculty member of Fort Lewis College’s Center for Southwest Studies and author of “Boomtown Blues,” a history of the oil shale boom and bust on the Western Slope.

“I think it’s extremely rare, it’s an untested technology,” Gulliford said of Shell’s freeze wall. “It has incredibly large environmental and energy costs that are as yet unknown. The goal is to avoid air pollution, so the goal is to avoid moving lots of rock. But that technology is not in any way understood or proven.”

The boom-and-bust economy is busted by corporate patience, restraint few energy companies show, he said.

“One of the things we’ve dealt with is corporate hubris,” Gulliford said. “If Shell really has a different idea … (withdrawing its permit application) was a wise move.”

Meanwhile, Davis defended Shell’s freeze wall test, saying the test, conducted at Shell’s Mahogany Research Site in Rio Blanco County, is going well despite drilling problems associated with the geology in the area.

“It just took longer to drill than expected, and the costs increased,” she said.

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

http://www.gjsentinel.com/news/content/news/stories/2007/07/05/7_5_1a_Shell_Oil_Shale.html?cxtype=rss&cxsvc=7&cxcat=7

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