Shell: Oil shale blocked

Photo by Dean Humphrey—Shell Oil official Dan Whitney, left, told a congressional oversight hearing Wednesday that the company’s applications for additional oil shale leases are being held back by the Obama administration’s review of an environmental study of oil shale development that was completed by the Bush administration.



Oil shale field hear 082411

Photo by Dean Humphrey—Shell Oil official Dan Whitney, left, told a congressional oversight hearing Wednesday that the company’s applications for additional oil shale leases are being held back by the Obama administration’s review of an environmental study of oil shale development that was completed by the Bush administration.

A rewrite of an environmental study for oil shale development in northwest Colorado is “a waste of taxpayer money” that is hindering development, a Shell Oil official said Wednesday.

Dan Whitney of Shell Exploration and Production Co. said there was no new information since a 2008 programmatic environmental impact statement that required a new statement. Whitney spoke during a congressional oversight field hearing conducted by two Colorado representatives, Scott Tipton and Doug Lamborn, both Republicans serving on the House Natural Resources subcommittee on energy and mineral resources.

Tipton’s 3rd Congressional District encompasses Colorado’s oil shale reserves, the richest in the world.

Shell Oil holds three research, demonstration and development leases on federal land in Rio Blanco County.

There was no new information that necessitated revisiting the 2008 environmental study, completed under the President George W. Bush administration, when the Obama administration took over in 2009, Whitney said.

The new study is holding back applications for three new leases, limiting the kind of innovation and variety of experimentation that will make oil shale a commercial resource, Whitney said.

Whitney was one of nine witnesses who testified to the subcommittee, including Helen Hankins, Colorado state director for the Bureau of Land Management.

The companies that hold federal leases on shale lands “are diligently pursuing that effort,” Hankins said.

The new environmental study doesn’t affect the existing leases, only those that are to be issued after rules are issued next year, Hankins said.

A sense of regulatory uncertainty, however, does lie over all federal oil shale leases because it’s unclear how the companies can transition from research, demonstration and development to commercial leases, Whitney said.

Another witness, former Grand Junction Mayor Jim Spehar, called on the committee to support the establishment of an oil shale trust fund or similar mechanism to help communities prepare for and deal with the effects of growth if an oil shale industry is to take shape.

A relatively small, 500,000-barrel-per-day oil shale industry could add 50,000 new people to northwest Colorado, Spehar said.

“That’s why I’m concerned about getting a head start” on development if and when oil shale development does take place, he said. “Current taxpayers shouldn’t have to pay for it.”

Several environmental organizations have urged small steps toward development of oil shale, citing threats to water and air quality, water quantity, and wildlife and aquatic habitat. Several Grand Valley residents conducted an alternative news conference Tuesday to counter the hearing, which they contended was tilted toward development.

Indeed, the hearing was entitled “American Jobs and Energy Security: Domestic Oil Shale, the Status of Research, Regulation and Roadblocks.”

One major roadblock remains the availability of water for the industry.

Anu K. Mittal of the Government Accountability Office said a study of the potential use of water over the life of an oil shale project can range from one to 12 barrels of water per barrel of the equivalent of oil for an in-situ project, to two to four barrels for an above-ground, retort project.

Another analysis offered by the University of Utah’s Institute for Clean and Secure Energy, suggested an average water consumption rate of 2.5 barrels for each barrel of oil from shale, according to Jennifer Spinti, research associate professor at the university.

The industry couldn’t rely on groundwater, according to a letter from the Colorado Department of Natural Resources to Rep. Edward J. Markey, D-Mass.

Federal oil shale lands were designated for lease in 1970, and still no large-scale program exists, testified Gary Aho of the National Oil Shale Association.

The failure to act on oil shale is indicative of the kinds of “uncertainty that makes us crazy” when trying to develop oil shale, Aho said.



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