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U.S. Backs Squeezing Oil From a Stone

Seeing potential in shale, Interior is opening federal lands to industry. But extraction methods are unproven, and in Colorado some see risks.

November 20, 2005|Julie Cart | Times Staff Writer

MAHOGANY TEST SITE, Colo. — Tucked into a ravine and hidden behind ridges standing like stony sentinels is the site of Shell Oil Co.'s ultra-experimental, highly anticipated 30-year project to unlock oil from vast underground beds of rock.

Here, on this sweeping plateau in western Colorado, the Bush administration has fixed its hopes for the next big energy boom: oil shale, which the U.S. Department of the Interior praises as an "energy resource with staggering potential." Members of Congress have described the region as the Saudi Arabia of oil shale.

Legislation recently signed by President Bush instructs the Interior Department to lease 35% of the federal government's oil shale lands within the next year; provides tax breaks to the industry; reduces the ability of states and local communities to influence where projects are located; and compresses multiple, lengthy environmental assessments into a single analysis good for 10 years.

Oil shale is immature rock that, left alone, would require millions of years of natural heating to produce oil.

Modern techniques greatly accelerate that process by cooking underground rock. But some experts warn that the process could use more energy than it yields, and conservationists and many local residents point to the massive amounts of water it will consume and to the disturbances to land, wildlife habitat and the lives of rural people.

For The Record
Los Angeles Times Friday January 13, 2006 Home Edition Main News Part A Page 2 National Desk 1 inches; 36 words Type of Material: Correction
Oil shale -- A front-page article Nov. 20 about oil shale said the U.S. Bureau of Land Management in Colorado was processing 10 new research and development leases. The agency was evaluating 10 applications for leases.

Residents wonder how oil shale excavations, which can be massive, will affect the half-million-acre basin that supports one of North America's largest migratory deer herds, prized elk haunts and more than 350 species of animals. They also ponder how industrialization and growth might play out in the largely rural landscape of Rio Blanco County, which has a population of 6,000, about 250 miles west of Denver.

"I don't like it," said Scott Brynildson, a rancher who also owns a plumbing company in nearby Rifle. "It's not why I live here. If I want all those people, I'd live in Denver. I wanted to raise my kids in a small town. It's just crazy."

Most of this area is ranchland with more sheep than people, its livestock herds ranging across rolling hills studded with cedar and stands of Douglas fir. But the Piceance Basin, as the region is known to geologists, is also a vast mineral storehouse where companies have leased public land to get at significant deposits of coal, natural gas, oil and oil shale.

Longtime residents have watched boom and bust cycles of gas, oil and oil shale come and go. They've seen legions of workers troop into small towns, snatch up rental housing and fill schools, hospitals and sewers beyond capacity.

Many residents of western Colorado still remember "Black Sunday," or May 2, 1982, when oil giant Exxon announced the closure of its $5-billion Colony shale project in Garfield County and laid off 2,200 workers, after producing hundreds of thousands of barrels of oil, seldom recovering the costs.

A year later, property foreclosures in Grand Junction and Mesa County were more than four times their 1980 numbers, and bankruptcies doubled. Local officials fear a reprise.

The region is only now beginning to recover and has redrawn its future as a popular place for retirees, hikers and hunters.

Oil shale is found in 16,000 square miles of rugged Western range land known as the Green River Formation -- mostly in Colorado but also small slices of eastern Utah and southern Wyoming. More than 70% of the nation's known oil shale reserves -- as much as 2 trillion barrels by some estimates -- lies under the region.

By Shell's reckoning, the denser oil shale formations here could produce a billion barrels of oil per square mile. Those projections are hotly debated, but as a point of comparison, should the Green River Formation produce as predicted, it would amount to as much as eight times the proven oil reserves in Saudi Arabia.

Terry O'Connor, Shell's vice president of external and regulatory affairs, said the company would decide by 2010 whether to pursue commercial production. But, he said, there was little doubt about the region's potential.

"We think this is the place and this is the method," he said.

Record oil prices and increasing scarcity have spurred renewed interest in exploration in the region, and improving technology has sparked optimism that oil shale's time has come. Shell says improved efficiency has made oil shale production economically viable when the price of oil is $20 to $30 a barrel.

To produce the oil, Shell and other companies sink heaters half a mile into oil shale seams for up to four years, subjecting the rock to 700 degrees.

Over time, natural gas and a liquid that can be refined into light crude oil rise to the surface.

To prevent the brewing hydrocarbons from spoiling groundwater, the heated rock core would be surrounded by a 20-to-30-foot-thick impermeable ice wall, which also requires electricity to keep it frozen.

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