New oil shale revival sparks water concerns

RIO BLANCO COUNTY – A possible resurrection of oil shale production in this Western Slope county has raised environmental concerns about its potential impacts on groundwater pollution and how a commercial-sized operation might impact water supplies slated for Front Range use.

Cathy Kay, spokeswoman for the Western Colorado Congress based in Meeker, said a 1 million- to 2 million-barrel-a-day commercial oil shale operation on the Western Slope could require “phenomenal” amounts – she estimates hundreds of thousands of acre-feet – of water to extract oil from the shale.

“If (oil companies) are going to need that amount of water to go commercial, water transfer could be completely stopped to the Front Range,” Kay said.

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Brian Werner, spokesman for the Northern Colorado Water Conservancy District which has water interests on the Western Slope, said the district “definitely has some concerns” if such a commercial operation were given a green light.

One possible area of impact could be on the district’s Windy Gap Firming Project, which aims to ensure reliable water supplies to Front Range communities and water users it serves by adding storage to its Windy Gap Project near Granby.

“There is some potential to impact Windy Gap, so there is a concern,” Werner said.

The district could also be affected if oil shale production consumed water now eyed for a possible Yampa River diversion project that could yield more than 300,000 acre-feet of water to the ever-thirsty and rapidly developing Front Range.

25 years on hold

Oil shale development in the West has been dormant since 1982, when Exxon pulled out of its Colony Oil Shale Project and threw about 2,000 people out of work in Garfield County.

But rising oil prices and uncertainty over foreign supplies have increased interest in oil shale extraction again, and the Bush administration has made development of a viable oil shale industry a national priority. In January, oil shale research and development leases were granted to three companies: Shell Frontier Oil and Gas (a subsidiary of Royal Dutch Shell); EGL Resources Inc.; and Chevron Shale Oil Co.

The 10-year leases on 160-acre tracts of public land in Rio Blanco County were given to the oil companies to design different methods of extracting oil from known oil shale deposits in the Piceance Basin. If successful, larger leases would be granted by the Bureau of Land Management to demonstrate commercial viability on a large scale, said Jim Edwards, a BLM spokesman.

Shell has led all other competitors in oil shale experimentation over the last 25 years through work on its Mahogany Research Project, named for the “mahogany” layer of oil shale in the Piceance Basin. Unlike traditional surface mining, Shell has been developing an in-situ method of heating sections of underground oil shale fields, baking oil and natural gas out of the shale rock into pools that can then be pumped to the surface.

With three oil shale leases, Shell appeared to have the inside track on going commercial, but suddenly withdrew its permit application in June because it wanted to first conduct more tests on property it owns rather than public land, according to Shell spokeswoman Jill Davis.

“It’s a good system but we’re still researching that technology,” she said. “We’re working on doing it on a football field-sized area on private property.”

Davis said Shell still intends to pursue its in-situ oil shale extraction on BLM lease properties and is not worried that its competitors will overtake it on the road to commercialization.

“We still know we’re very far ahead of other companies and they know that, too,” she said.

Water demands unknown

No one has any firm idea how soon commercial development of oil shale in western Colorado will take place, nor exactly how much water will be required to support it. But environmentally oriented groups like Western Colorado Congress, Western Resource Advocates, the Colorado Environmental Coalition and the Natural Resources Defense Council are running up red flags about its potential for air and water pollution and depletion of the state’s water supplies.

“It would consume just about all the water that’s left in the Colorado River,” Kay said. “Are you going to take this limited amount of water that’s left and use it for growth or just give it to one industry?”

Fast-track development of an oil shale industry has many worried, even BLM’s Edwards and Shell’s Davis admit. But Edwards said development timelines have been relaxed and environmental and water consumption concerns will be addressed throughout the development process.

“(Oil companies) have to show they have enough water to do what they say they’re going to do, and if they don’t, they don’t get a permit,” Edwards said. “Nobody’s going to let anything slip through that’s going to suck everything dry and the public’s not going to let that happen, either.”

Edwards predicts that commercial production of oil shale in Colorado – if it happens – is at least a decade and perhaps two decades away.

Meanwhile, Werner said concerns over water loss to the Front Range due to oil shale production are based only on speculation at this point.

“We don’t have any idea what the numbers are,” he said. “But we don’t think it would take everything on the West Slope for future oil shale development.”