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The Globe & Mail: Colorado soaks up Alberta’s oil sands expertise

NORVAL SCOTT
November 16, 2007

CALGARY — The U.S. is looking to companies now operating in Alberta for help in unlocking its own version of the oil sands, the massive oil shale deposits that lie underground in Colorado, Utah and Wyoming.

The hope is that the U.S. can “learn lessons” from Alberta’s oil sands experience that will stand it in good stead when it comes to developing its own complex, unconventional crude resource, said Bill Ritter, the Governor of Colorado.

“We have enormous deposits of oil shale, but so far there hasn’t been a technology that has allowed it to be commercially developed,” he said in an interview with The Globe and Mail in Calgary.

Mr. Ritter was in Calgary to meet with companies including EnCana Corp. and Suncor Inc., as well as Calgary-based representatives of Royal Dutch Shell, before embarking on a tour of Suncor’s oil sands project near Fort McMurray, Alta. The technologies being used in the oil sands could be key to unlocking America’s shale resources, he said.

“The things that these companies are doing in Alberta might translate to Colorado,” he said. “We’re really looking at the experience of Alberta in order to ensure we can capitalize on all our resources and make sure that industry thrives, but also ensure we’re guarded about its impact on the environment … It’s important we get a sense of the dynamics.”

As much as one trillion barrels of crude -or half of the world’s known oil shale reserves – lie deep underground in the U.S. Rockies, but the resource is even more difficult to extract than bitumen from the oil sands, and has so far proved resistant to commercial production.

Royal Dutch Shell is believed to be furthest along in achieving a solution, although there are still many questions about the environmental effects of the company’s methods and over possible costs. The company wasn’t immediately available for comment, but has previously said that its Mahogany research project in the Piceance basin, in Colorado, involves drilling down into the shale rock to access a chemical called kerogen, which produces oil after being subjected to high heat.

The company uses heated tubes sunk into the shale to extract the oil, freezing the area around it with cold ammonia – the environmental impact of which isn’t yet fully understood, Mr. Ritter said. In addition, the U.S. has yet to come up with a royalty regime for its oil shale deposits – a practical impossibility, given that it’s not yet known how much it will cost to produce the crude, he said.

“Nobody knows how long this will take, or whether the technology companies are trying will be the one that works,” he said. “My hope is that we find a way that’s environmentally sound to extract the huge resource.”

Drawing companies to the oil shale isn’t Colorado’s only concern, as the state has conventional oil and gas opportunities, and renewable energy resources such as wind power, that Canadian companies would be interested in, Mr. Ritter said. He added that he had been in discussions with a Canadian firm over developing a 100-megawatt wind farm in Colorado, while earlier this week Calgary-based Baytex Energy Trust said it was opening a Denver office to purse opportunities in the U.S.

http://www.theglobeandmail.com/servlet/story/LAC.20071116.RCOLORADO16/TPStory/TPBusiness/?page=rss&id=GAM.20071116.RCOLORADO16

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