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ExxonMobil Renews CO Oil Shale Search

Mon, 03/17/2014 - 10:42am
DENNIS WEBB, Grand Junction Daily Sentinel

GRAND JUNCTION, Colo. (AP) — ExxonMobil has edged another step closer to undertaking oil shale research-and-development projects with the Bureau of Land Management's approval of development plans.

For ExxonMobil, the projects mark a renewed attempt to commercially extract petroleum from oil shale after what was then Exxon shut down its Colony Project in 1982. That shutdown resulted in some 2,000 workers losing their jobs and caused economic repercussions for years from Glenwood Springs to Grand Junction.

The tentative approvals are for the company's research, demonstration and development leases on federal land southwest of Meeker in Rio Blanco County.

The projects still must undergo review by the Colorado Division of Reclamation, Mining, and Safety.

ExxonMobil also is proposing a development project involving heating the oil shale underground and then pumping out the oil — a process different from the Colony Project, which involved surface mining and heating of oil shale. Exxon wants to hydraulically fracture the oil shale, fill the fractures with conductive material and then electrically heat the shale.

Shell, Chevron and American Shale Oil hold R&D leases in Rio Blanco County from the earlier round of leasing — including three leases in Shell's case — with the potential to convert each lease to nearly eight square miles for commercial development. But while American Shale Oil continues to work on an on-site project, Chevron, and more recently Shell, have ended their oil shale projects in connection with their leases. Shell had done the most work of any company on a shale project in Colorado before shutting it down last year.

In approval documents for the ExxonMobil, the federal Bureau of Land Management said proposed actions with mitigation represent an opportunity to develop domestic energy sources and to increase knowledge of commercially viable production, development and recovery technologies of oil shale resources, consistent with sound environmental management.

It also is expected to provide a basis for informed future decisions about whether and when to move forward with commercial scale development and allow for the assessment of its impacts on the environment.

David Abelson, an oil shale policy adviser for the Western Resource Advocates conservation group, said that if history is any indication, there's a strong likelihood the latest projects won't prove economically viable.

He said everyone learned a lesson when Exxon shut down its Colony Project in 1982.

"One thing I think we have learned over the years is to proceed cautiously so we don't repeat what happened in western Colorado in the early '80s," Abelson said.

He said both Shell and Chevron showed a big difference from companies' past practice in acknowledging failure early on rather than proceeding to the point where shutting down a project is economically devastating.

He said this round of leases should require more reporting regarding protection of air and water quality and other concerns.

ExxonMobil repeatedly has emphasized the desire to take a prudent, step-by-step approach to its new oil shale undertaking, something reiterated in its development plan.

It plans to first conduct an appraisal phase involving drilling one or more test wells to determine oil shale resources within the lease, along with groundwater monitoring wells to test water quality before work continues.

It currently estimates 600 million barrels of oil are contained in the shale within its lease.

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