Shale oil firm readies for pilot test
You know you work in a remote location when visitors are impressed to see a UPS truck pull into your parking lot.
If the employees of American Shale Oil LLC have their way, one day they’ll be putting their rural Rio Blanco County workplace on the national map when it comes to domestic energy production.
The company holds one of three research, development and demonstration leases for the Bureau of Land Management land in Colorado. The others were granted to two better-known energy companies, Shell and Chevron, for nearby parcels in Rio Blanco counties.
Bolstered by a 50-50 partnership it entered with another energy giant, France’s Total, in 2009, AMSO is working toward an initial pilot test of its proposed shale development technology early next year.
“We hear lots of things in the press occasionally that nobody’s doing anything (with the leases), but we’re just quiet,” Alan Burnham, AMSO chief technology officer, said as the company hosted a visit last month by members of Associated Governments of Northwest Colorado.
It’s easy to keep a low profile when you’re located up a rugged dirt road several dozen miles from Rifle to the southeast, or Meeker to the northeast. But AMSO’s project is taking on growing visibility as it builds a surface processing facility and prepares to test it.
The research and development phase is expected to employ about two dozen people. AMSO is hoping its test results will enable it to take advantage of lease terms that provide for possible conversion of its 160-acre initial lease to a commercial lease covering eight square miles.
Its ultimate goal is to produce 100,000 barrels of oil a day for 25 years. The company believes it can do that with no more than perhaps 200 to 250 employees.
“Using this technology, it reduces the impact to the communities to an acceptable level,” said Roger Day, vice president of operations.
The technology Day speaks of was developed nearby, not for oil shale but for nahcolite, or baking soda, which is found locally intermixed with oil shale. Day was involved in the technology’s development, pioneering drilling techniques to produce nahcolite through high-temperature underground solution mining and directional drilling.
The company American Soda used a temperature of 350 degrees to “rubbilize” oil shale to produce its nahcolite. AMSO plans to take advantage of the rubbilization approach. It intends to use 650-degree heating wells drilled down and then horizontally into a shale layer to produce boiling oil within the shale. The oil’s vapors will rise through shale rubble to help further release the oil within it.
AMSO hopes its method addresses the challenges of shale’s resistance to heat flow. It can take years for heat to be conducted even 20 or 30 feet in shale.
The company proposes drilling its heating and oil and gas recovery wells in approximately 200-foot-wide rows along the edges of 2,000-foot panels, and then horizontally beneath them, resulting in less than 10 percent of the surface being affected.
It also is seeking to develop a deep shale zone that’s separated from overlying groundwater by rock. That eliminates the need to protect groundwater aquifers, a challenge Shell is trying to overcome by creating freezewalls around areas where it also hopes to produce oil from underground shale by heating.
AMSO believes its process will require no more than a barrel of water consumed per barrel of oil produced, and it expects its process to actually produce water tied up in rock.
Its process also is projected to produce enough natural gas to provide for all of the energy needed for the process.
AMSO projects that at full commercial production, it would use less than one-tenth of a percent of the state’s water to generate 1 percent of its gross economic production.
“That’s the kind of economic gain that we should be thinking about to get our country on a good financial footing,” Burnham said.
At an oil price of $80 per barrel, AMSO’s proposed process could generate government royalties of $10 per barrel.
At this summer’s presentation, Rifle Mayor Keith Lambert told AMSO officials their process would address a lot of the concerns he hears raised about oil shale development.
“I hope that everything goes as well as you described it. I hope it goes on a timely basis. I hope that we see some direct outcome for this region as quickly as we can,” Lambert said.
Rio Blanco County Commissioner Ken Parsons said the oil shale resource is important to the entire country, but he thinks one of the greater challenges AMSO might face is air quality, if its process requires burning natural gas upwind of wilderness areas.
AMSO hopes to be able to demonstrate through its testing that it will be able to meet air-pollution regulations. It also is researching carbon sequestration, the concept of putting carbon back into the ground as part of its process so it doesn’t contribute to greenhouse gas emissions.
Such emissions continue to be one of the major concerns surrounding possible oil shale development. A recent literature review conducted for the Western Resource Advocates environmental group said oil shale development would result in a “significant release of greenhouse gases,” in part because of the low projected energy return on investment.
The review claims that studies show extracting oil from shale could require as much energy as is produced, when counting energy such as natural gas that may be generated as part of the process and used to help power it.
AMSO’s president, Claude Pupkin, told local officials during last month’s site visit that the United States could gain energy security and boost its economy through oil shale development. Alternative energy and conservation are important, too, but oil shale is a “rich resource” that could help serve as a bridge fuel while such approaches are pursued, he said.