The O. Zone

Latest round of Colorado's oil-shale shell game apparently coming to an end

By David O. Williams
Real AspenSeptember 25, 2013
In high-alpine, arid places like Colorado, the least amount of water and energy you can consume to produce more energy the better, one would think. But for a century speculators have been intrigued – some would say obsessed – with unlocking the organic kerogen trapped in rocks on the state’s Western Slope and converting it into oil.

Back when I had a regular job covering energy and environmental issues for the Colorado Independent, I wrote quite a bit about the seemingly endless quest to make oil shale production commercially viable. Opponents called it a “never-ending science project,” while proponents touted it as the key to energy independence in an increasingly unstable world.

To actually extract crude oil from the kerogen, oil companies have to insert and superheat huge metal rods deep underground, requiring a great deal of electrical power. Shell Oil, up until very recently, had been experimenting with underground “freeze walls” to prevent chemical compounds from then leaching into Colorado’s scarce groundwater supplies. And a Shell official once told me it takes at least three barrels of water to produce one barrel of oil (others put that number much higher).

Garfield County Commissioner John Martin later told me we should seriously consider nuclear power, which requires an enormous amount of water for cooling, to provide enough electricity for the state’s still-unproven oil shale industry.

Martin is the same guy who, when he was a cop in the days after Black Sunday, May 2, 1982, served eviction notices to home and business owners shattered by the pullout of Exxon from its Colony Oil Shale Project – a move that cost 2,200 people their jobs. Those layoffs included one of my high school teachers in Denver, who quit to move to Parachute during the height of the boom. She had to move back to Denver a few months later when it all went bust.

Coloradans have long been divided on the promise of oil shale.
Shell in-situ oil shale research project in Rio Blanco County (USGS photo).

“In the last six years U.S. natural gas production has increased 20 percent,” the late Randy Udall told me in 2011. “In North Dakota, the Bakken Formation is yielding 300,000 more barrels of oil today than it did five years ago. The oil and gas industry is very good at unlocking difficult oil and gas petroleum resources. But oil shale continues to be a laggard. It continues to be a no-show, and one must really wonder whether oil shale is ever likely to be a significant player in U.S. energy supplies.”

On the other side of the coin, oil shale expert Dr. Jeremy Boak at the Colorado School of Mines likened the Obama administration’s “go-slow” approach to oil shale to the Bush administration’s foot-dragging on climate change.

“It’s curious to hear the same sort of arguments being made by this administration that were made by the Bush administration for not doing anything on climate change,” Boak told me in 2011. “We’ve got to have all the answers before we can move.”

Now comes the news that, like Chevron in 2012, Shell is pulling out of its oil shale research and development leases in Colorado. An oil shale proponent told the Glenwood Springs Post Independent he thought the big oil companies would be able to solve the puzzle but now it’s likely up to the small entrepreneurs (over the course of the next century, presumably).

By then, fossil fuel consumption will hopefully be waning and we’ll never have to smash up or superheat all of those rocks in Northwest Colorado where we all like to hike, bike, hunt and fish.

comments: 1 Comment on "Latest round of Colorado's oil-shale shell game apparently coming to an end"

JeremyBoak – Sept. 27, 2013, at 10:18 a.m.

It is hard to see the intensely sporadic interest in oil shale development of the last century as an obsession, unless politics
is the main driver for one's views. When oil prices were high, people looked at oil shale. Most people actually engaged in it recognized it as a challenging proposition that appeared, at least temporarily, to be within reach.

The author ignores the fact that Shell has not stopped working on oil shale, and continues its efforts in Jordan, a country whose government does not do all it can to stop development. Although Shell will not say regulatory uncertainty informed the shift, actions speak louder than words. Indeed, the investment in Jordan, a country many investors are avoiding due to the geopolitical situation in the neighborhood, speaks volumes about Shell's interest in oil shale. ExxonMobil and AMSO continue their work in Colorado, and Red Leaf and Enefit continue in Utah. Worldwide, a very large number of projects are under way.

Oil shale production worldwide is 30,000 barrels per day. Not big, but I would take a 1% royalty on that amount. Large companies have a very wide portfolio of options, and they regularly rebalance that portfolio. Given the widespread contraction in the industry under way now, and Shell's abandonment of several other Colorado projects, the withdrawal from oil shale is significant, but cannot be reasonably interpreted as the "Latest round of Colorado's oil shale shell game apparently coming to an end."

Randy Udall was, of course, an ardent opponent of oil shale development, so his thoughts should be considered political, not technical. The author clearly shows that he fits into this camp of political commentators, not serious energy analysts.

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