Wyo gets oil shale project

Wyo gets oil shale project
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GREEN RIVER - Scientists estimate there's up to 1.5 trillion barrels of oil within shale formations that could be recovered in northwest Colorado, southwest Wyoming and northeast Utah.

But it's going to require new, environmentally friendly technology to make it commercially viable to develop all that oil shale, they say.

Some of that technology could come out of an oil shale research and development pilot project slated for Sweetwater County, officials involved in the effort said.

Anadarko Petroleum Corp. - under an agreement with General Synfuels International - is launching Wyoming's first oil shale research program in nearly three decades to determine the economic and environmental feasibility of developing oil shale in southwest Wyoming.

General Synfuels, a wholly owned subsidiary of Earth Search Sciences Inc., secured the exploration agreement last month for a small parcel of private land south of Rock Springs, according to Anadarko spokesman Rick Robitaille.

The Texas-based Anadarko holds vast reserves of oil shale deposits in the region that are intertwined with federal holdings.

The Bureau of Land Management instituted a moratorium on oil shale development shortly after research efforts fizzled in the early 1980s, largely because the technology to recover oil from the rock wasn't efficient enough.

Congress directed the BLM in 2006 to lift the moratorium and began accepting nominations for oil shale research projects. The BLM received 18 permit applications for such projects in the three states. Anadarko's was the only application for Wyoming.

The exploration agreement in Wyoming covers a 160-acre site about 35 miles south of Rock Springs on a Union Pacific Railroad section, said John Christiansen, a spokesman for Anadarko's mineral programs, in a phone interview from Houston.

The agreement will allow General Synfuels to test and develop the company's patented technology to recover hydrocarbons from oil shale using a process that prioritizes "environmental sensitivity," said Luis Lugo, CEO of Earth Sciences.

In a news release, Lugo said the high production costs of conventional oil recovery are prompting many companies to search for ways to apply new technology to oil shale.

He said the agreement gives General Synfuels access to land with proven oil shale reserves that will allow the company to move forward with a "proof-of-concept" prototype for its underground gasification technology.

"With oil prices at the levels we see today … our expected production costs will be highly competitive and should result in substantial returns to our investors … and result in economically viable sources of domestic oil," he said.

Lugo said the company's breakthrough technology involves an "environmentally low-impact and energy self-sustainable gasification process" that has the potential to drastically reduce production costs for oil shale compared to conventional oil development methods.

"We anticipate our gasification process to yield positive results, (both) environmentally and commercially, in a matter of months," he said.

Huge volumes

An estimated 2.6 trillion barrels of in-place oil - some 1.5 trillion barrels of it considered recoverable - saturate the Green River Basin's hard-rock subterrain, according to BLM estimates.

That represents a volume about 20 times greater than the nation's estimated total of 116 billion barrels in conventional oil reserves.

Christiansen said the Sweetwater County project aims to explore different sciences associated with oil shale development and analyze the potential resource base that might exist in the area.

He said southwest Wyoming is particularly well suited to handle such energy activity should the company identify a commercially viable development program.

"Obviously this is a pretty oil shale-rich area potentially, and by allowing them to do this, we can get a better idea about the prospects of the area in terms of oil shale development," he said.

"Right now, we think this property is pretty optimal for an R&D because it's near existing infrastructure," Christiansen said. "You've got transportation in the area, and you've also got a pretty highly skilled work force already there, so it's not a bad place to conduct a test like this and see what GSI can do with it."

Anadarko is one of the world's largest independent petroleum companies and holds vast reserves in Wyoming's mineral-rich "land grant strip," a checkerboard of property stretching some 700 miles across the southern portion of the state and parts of Colorado and Utah.

Getting the oil out

Federal scientists say oil shale is a fine-grained sedimentary rock that contains various amounts of organic matter. Oil in the shale is contained within a waxy substance called kerogen.

In order to release oil from the kerogen, the rock must be heated to extreme temperatures in an oxygen-free environment. The process is known as "retorting."

Two different retorting methods are currently used: surface retorting, whereby standard surface mining or underground mining techniques are used; or in-situ retorting, which is done at the depth of the oil shale deposits.

The United States holds more than 50 percent of the world's known oil shale resources, most of which are contained in deposits found in Colorado, Utah and Wyoming.

The oil shale deposits in Wyoming are primarily located in Sweetwater County in beds ranging in size from several feet to several hundred feet thick. Total reserves for the Green River Basin are estimated to be 417 billion barrels.

Under the BLM's national oil shale program, the agency recently approved 10-year lease agreements for a variety of research projects on 160-acre parcels of both private and public lands.

In January, the Bush administration decided to issue a second round of leases to companies for oil shale projects, which could have led to oil shale works on 1.9 million acres in the three states, greatly expanding the program. But in February, new Interior Secretary Ken Salazar withdrew the second round of leases and requested comments on how oil shale research should be conducted.

The Wyoming Wildlife Federation and other conservation groups are wary, however, of industry's motives in oil shale development and how companies might actually use federal lands.

WWF Executive Director Walt Gasson said many people hunt and fish on public lands in southwest Wyoming, and those recreational opportunities could be affected by any oil shale development.

He said the pilot oil shale research projects could possibly result in hundreds of thousands of acres of vital wildlife habitat for big game and sage grouse being occupied by machinery at the exclusion of all other uses.

"I realize we need some energy development, but they've already blanketed western Wyoming with roads and wells," Gasson said. "Are we so desperate that we'll sacrifice the places we've hunted for generations for something as uncertain as oil shale?"

Steve Torbit, Rocky Mountain regional executive director of the National Wildlife Federation, predicted the entire oil shale experiment will be "a colossal waste of water" for the region. He said extracting and producing oil from shale will require tremendous quantities of water that may not be readily available.

Southwest Wyoming bureau reporter Jeff Gearino can be reached at 307-875-5359 or at gearino@tribcsp.com.

* Last we knew: The Bureau of Land Management lifted a moratorium on oil shale research and development in Wyoming, Colorado and Utah.

* The latest: Anadarko Petroleum Corp. and General Synfuels International Inc. announced they will test oil shale technology in Sweetwater County.

* What's next: GSI will begin work on a pilot oil shale project later this summer on a 160-acre tract about 35 miles south of Rock Springs.]]->

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