Report: Oil Shale Offers Promise, Pitfalls

By David Frey, 6-15-09

Oil shale has a rocky past in the West and an uncertain future, but the sheer amount of resources available, and dwindling supplies of world oil, could make it a crucial resource.

That’s the conclusion of a report by the University of Colorado’s Center for the American West, which found “serious and significant” environmental challenges related to extracting the fuel, balanced against the “world class proportions” of oil shale believed to be in the ground.

“As the world moves toward a renewable energy future, oil shale may well be the end game of the Fossil Fuel Age,” write authors Patty Limerick, the center’s director, and Jason Hanson, a member of its research faculty. “But it is a very big play.”

Geologists believe some 1.2 trillion to 1.8 trillion barrels of fuel may lie locked in the shale formations that underlie a vast region stretching from western Colorado to eastern Utah to southern Wyoming.

Not all of that oil is recoverable, but by even some of the more modest estimates, 800 billion barrels might be. That’s more than three Saudi Arabias’ worth of oil, and enough to serve current U.S. demand for a century. Most of that is in the rich Piceance Basin on Colorado’s Western Slope.

Despite a checkered past that has more in common with snake oil than fuel oil, oil shale is at the center of attention again thanks to rising oil prices and concerns about foreign oil. Under President Bush, the federal government offered six leases for industry to test new ways to extract the oil, called kerogen, from the rock. After President Obama took office, former Sen. Ken Salazar, D-Colo., an oil shale skeptic, took the helm as Interior Secretary. He rescinded Bush-era oil shale rules, put the kibosh on a round commercial oil shale leases and replaced them with another round of test leases, still promising that oil shale isn’t off the table.

The resurgence of interest has resumed age-old rivalries between oil shale boosters, who see it as a salvation for a fuel-hungry nation dependent on foreign oil, and opponents, who worry about the environmental consequences and economic viability of the controversial fuel.

“Doing it right in Shale Country will mean developing operations that address not just the technical challenges of oil shale recovery but that are also mindful of social, economic, and environmental consequences,” says the report, called “What Every Westerner Should Know About Oil Shale.”

The even-handed report has won praise from both sides of the debate, including Karin Sheldon, executive director of the Boulder, Colo.-based environmental law and policy organization Western Resource Advocates, and Tracy Boyd, with Shell, one of the companies seeking ways to make oil shale development profitable.

That has been one of the biggest obstacles facing oil shale. The fuel is in the ground, but releasing it from the rock is costly and energy-intensive. Like most other companies making use of the test leases, Shell is experimenting with an “in situ” process that heats the oil shale in the ground, releasing the kerogen from the rocks, and draws it out using wells. Only one of the six test leases, the one in Utah, is using the traditional method of mining the rock, crushing it, and heating it in a massive oven to release the fuel.

Environmentalists have worried about a range of environmental problems that could come from either process. They include land disturbances, either from mines or from intensive drilling. Traditional oil shale processes have used tremendous amounts of water. Emissions from oil shale operations could harm air quality.

“In Shale Country, the opposition to energy development cannot simply be written off as agitation by overwrought or elitist armchair environmentalists,” the report says. “The Western Slope’s breathtaking scenery and magnificent wildlife attract tourism that amounts to a significant economic driver for local communities – greater in the long term than energy development, by some estimates.”

Other concerns include the impacts of an overnight population boom to remote areas as full-scale oil shale development could mean the equivalent of a new city in what is now rolling sagebrush country, with reverberating impacts through neighboring communities. Towns have begun gearing up for a “maybe boom,” the authors say.

In 1982, when the last oil shale boom went bust and Exxon shuttered its western Colorado plant on a day remembered as Black Sunday, it dealt a devastating blow to the region’s economy. Over the next two years, the authors say, 24,000 people fled western Colorado while unemployment and foreclosure rates soared and banks failed.

“The disaster tarred the entire industry,” the report says, “and every operator in Shale Country today must continue to deal with the fallout. The next round of oil shale development will occur in the shadow of the past. Operators should be aware that their actions are being evaluated against and constantly compared to what happened before.”

Against these fears, though, is the sheer size of the resource that could be available.

“Oil shale has the potential shift the center of gravity in the U.S. petroleum supply away from the Persian Gulf and to the Americas, thus freeing the nation from our reliance on unfriendly oil producers overseas,” the report notes.

The authors praised today’s energy companies for their cautious approach this time around, and government officials for trying to avoid the pitfalls that befell past efforts. But, they warn, “there will be unintended consequences. Of all of the questions surrounding oil shale in the coming years, the most important question facing the stakeholders in Shale Country and elsewhere is this: Will we have sufficient nimbleness, agility, and will to respond when those consequences appear?”