The Bush administration moved Thursday to jump-start oil shale development in Colorado, Wyoming and Utah by offering research sites that can be converted to 5,100-acre production leases if companies prove they can turn rock into fuel.
The Bureau of Land Management announced it will accept proposals for 160-acre research projects on federal lands across 16,000 square miles in the three states until Sept. 7.
A Colorado BLM official said he expects plans employing techniques that range from strip mining to a new on-site heating technique being developed by Shell Oil Co. near Rangely.
“With the price of oil so high, we expect a pretty good mix of companies who want to try and tap one of our biggest petroleum resources,” said Jim Edwards, chief of the state BLM office’s solid minerals branch.
Successful projects could result in 5,100-acre blocks of federal land locked up by industry for 35 years or more.
The U.S. Geological Survey estimates the U.S. has more than 50 percent of the world’s deposits of oil shale.
Geologists say up to 1 trillion barrels of oil lie bound in the 1,000-foot-thick shale formations of western Colorado and nearby areas of Wyoming and Utah, or roughly as much as the rest of the world’s proven oil reserves combined.
Environmental groups pressed the BLM last fall to limit participation to companies developing new technologies.
“It doesn’t sound like (a) research and development program if they’re willing to accept techniques that were rejected 25 years ago,” said Bob Randall of Western Resource Advocates.
Proposals will face environmental and technological analysis before 10-year research leases are awarded, Edwards said.
Another round of environmental reviews would be required before the agency awards 20-year production leases.
“If we don’t believe a technology fits our environmental protection standards, we won’t approve the lease,” Edwards said.
The agency, however, has no plans to do a regionwide study on the cumulative impact of widespread oil shale development in the three states, he said.
Environmentalists say the BLM has established no performance standards to judge the commercial applicability of research techniques.
They also say they are worried the agency will feel compelled to award production leases no matter how inefficient or dirty the project.
“When they get to that point 10 years into a project, it will be real hard to tell a company, ‘No, you can’t get your 5,000 acres,”‘ said Steve Smith of the Wilderness Society. “I imagine such a decision would produce an immediate lawsuit.”
The petroleum bound in the shale, called “kerogen,” has not yet been turned into oil by natural heat and pressure. Each of the three main oil shale production techniques uses heat to complete the transformation.
The oldest method, in use in other countries, mines the shale and cooks it in surface “retorts” to extract the oil. A variant uses explosives to create an underground pocket of shale rubble that is burned to release the oil.
The Shell process being developed at the company’s Mahogany Research Project, in Rio Blanco County, uses a grid of long electric cathodes to heat the rock and release the oil. The company hopes to make a decision about commercial production by the end of the decade.
The Shell process and mining cause 100 percent surface disturbance. All three produce chemical wastes that can contaminate groundwater.
The government’s first oil shale leasing program ended with the “Black Sunday” debacle of 1982, when Exxon announced it would close a $5 billion project near Parachute and laid off 2,200 workers.
Edwards said the lessons learned from Black Sunday caused the BLM to advance the current phased approach.
“We’re starting out with baby steps here so we can monitor these projects,” he said.
Staff writer Theo Stein can be reached at 303-820-1657 or tstein@denverpost.com.
