Utah Oil Shale Project Advances | 2010-10-14

By Amy Joi O'Donoghue, Deseret News

VERNAL — An oil shale demonstration project 60 miles outside of Vernal is among three in the country to clear a hurdle on Wednesday, advancing through a review process that makes the demonstration project move closer to reality.

The Bureau of Land Management announcement said reviews of three nominations for oil shale research, development and demonstration had been completed by an interdisciplinary team made up of representatives of governors from Utah, Colorado and Wyoming, as well as the U.S. Department of Energy.

Colorado and Utah offices of the BLM will now complete a federally mandated environmental review. That could take up to 14 months.

One lease is held by AuraSource in Utah, while the other two are in Colorado with ExxonMobil Exploration Co., and Natural Soda Holdings Inc.

AuraSource Chief Financial Officer Eric Stoppenhagen said the two-year-old company uses a low-temperature catalytic process to recover oil from oil shale, relying on less than one barrel of water per barrel of shale oil that is produced. Water consumption is driven more by mining and road dust control, as well as reclamation efforts.

In China, AuraSource's plant in Qinzhou has the processing capacity of 1 million tons of oil shale.

BLM's director Bob Abbey said the projects will serve as a good blueprint to answer fundamental questions about the technology of oil shale extraction.

"To determine whether oil shale will be a viable energy source on a commercial scale, we need to support critical research to answer fundamental questions about the feasibility of the technologies, their impacts on the environment and local communities, and their use of water," Abbey said. "This second round of leases will help us answer those critical questions so that we can chart a safe, orderly and responsible path for our energy future."

The federal agency solicited nominations of parcels, not to exceed 160 acres, for oil shale research, development and demonstration for a 10-year lease. Applicants could also identify up to an additional 480 acres to be reserved for a potential commercial lease, for a total of 640 acres.

The announcement of the nominations advancing forward comes nearly a year after Interior Secretary Ken Salazar opened a new round of the leases, accompanied by more stringent regulations and requirements that environmental impacts be addressed.

While acknowledging that exploration of oil shale extraction technologies should be pursued, Salazar said such projects need to answer questions related to commercial viability, impacts to water and wildlife habitat.

Oil shale is a fine-grained sedimentary rock containing organic matter from which shale oil may be produced. The organic matter, derived mainly from aquatic organisms, is called kerogen.

According to the U.S. Geological Survey, the United States holds more than half of the world's oil shale resources. More than 70 percent of the U.S. supply is on federal lands in Utah, Colorado and Wyoming.