U.S. Senator John Barrasso of Wyoming introduced the American Energy and Western Jobs Act in May in an attempt to streamline the leasing process for the oil shale industry in the Rocky Mountains.
The bill would repeal onshore leasing reforms proposed by Department of the Interior Secretary Ken Salazar last year, and would also force Salazar to open 10 more research and development parcels for lease in Wyoming, Utah and Colorado. (The bill also called for repealing the 2011 Wild Lands Order, though Salazar backed away from that policy earlier this week.)
The language of the bill is leaving some energy industry watchdogs uneasy.
The proposed legislation — cosponsored by fellow Wyoming Republican Mike Enzi and Utah Republicans Mike Lee and Orrin Hatch — would also streamline the permitting process by speeding up lease issuance after purchase, while requiring the DOI to set onshore oil and gas production goals that maintain or ramp up production levels. Simply put, it would be a return to the oil shale regulations of the Bush Administration.
“Higher energy costs continue to make it harder for families across the country to make ends meet,” Barrasso said in a statement. “The federal government controls vast energy resources in the Western United States.”
Geologists estimate western Colorado, southwestern Wyoming and eastern Utah sit on oil shale deposits that could potentially produce more oil than Saudi Arabian reserves, containing anywhere from 800 billion barrels of oil to a few trillion. But, Barrasso said, oil shale development companies are hindered by federal leasing regulations, allowing Rocky Mountain resources to remain under-utilized.
“In order to increase energy production, we must streamline the process and repeal this Administration’s polices that are making the pain at the pump worse,” Barrasso said. “The legislation will help bring down the cost of gas and give American energy producers the certainty they need.”
Oil shale development has piqued interest in the American West since the early 1900s. During the First World War, the Office of Naval Petroleum and Oil Shale Reserves was established to research shale in the region as a possible emergency fuel supply.
In the late 1970s, Exxon attempted to produce oil commercially in western Colorado, but after the company faced rising costs and low gasoline prices, Exxon ended the project on what the locals called “Black Sunday.” Now, technological advancements are again stoking interest in a commercially viable shale industry.
Laura Nelson, the Vice President of Red Leaf Resources Incorporated — a Sandy, Utah-based oil shale development company — said at the University of Utah’s Unconventional Fuels Conference in May that Red Leaf plans to begin production sometime next year, and the site could begin producing commercially by 2014.
Red Leaf’s project, located in the Uinta Basin in eastern Utah, would produce 9,500 barrels of oil a day, she said, which would only meet a small percentage of U.S. oil needs. (The U.S. consumes 20 million barrels of oil each day.) The Red Leaf project would also create 200 jobs.
Nelson also said the technology the company has developed, called EcoShale, uses significantly less water than most estimates for oil shale development, which has always been a concern for shale opponents, the Salt Lake Tribune reported.
Red Leaf Resources aside, most commercial oil shale processing is still, at the earliest, five to 10 years out, according to Glenn Vawter, executive director of the National Oil Shale Association based in Glenwood Springs, Colorado. Oil shale processing technology is still being developed, and the leasing process for federal lands can take several years, he said.
With gasoline prices lingering near $4 a gallon, there is continued interest in Western oil shale deposits, but oil shale technology isn’t ready to meet U.S. demand. High gasoline prices may speed up technological advancements in the industry, Vawter said.
“I think it’s technology-driven at this stage, but of course, the economics are always a factor,” Vawter said. “With oil at $100 a barrel, many in the industry still see ways to make this competitive.”
At the moment, many companies are looking at in-situ production methods, which heat the shale below ground and bring oil to the surface, Vawter said. The Red Leaf project would be a modified in-situ system.
Shell has spent $200 million on an experimental in-situ operation near Rifle, Colorado, about 200 miles west of Denver, in the heart of Colorado’s oil shale country. The project recovered 1,700 barrels of light oil, but Shell has yet to prove if the process would be commercially viable, according to a company research report.
There are skeptics concerned with Barrasso’s proposed bill, and the future of commercial oil shale development. Matthew Garrington — the deputy director of the Checks and Balances project, a Denver-based government and energy industry monitoring group — said the bill is lopsided.
“(Barrasso’s bill) is a wholesale giveaway to Big Oil and Big Gas,” Garrington said.
Garrington pointed to the bill’s 10 new DOI research and development leases, saying there are plenty of spots in private locations in Utah where companies could begin projects. Like many, he also remains skeptical of commercial shale development, and its future as part of the American energy economy.
“Oil shale is pure science fiction,” Garrington said. “Big Oil has been saying that oil shale will be our savior since the 1920s, but I don’t see the economics changing anytime soon.”