This isn’t your dad’s oil shale development

ExxonMobil is back in the oil shale game.

Nearly 32 years after Black Sunday, it’s still difficult to associate the words “Exxon” and “oil shale” without reflexively recalling the economic devastation that followed the company’s decision to shut down its Colony Project in 1982.

Anyone who was here then remembers the palpable sense of dread that fell over the community when Exxon announced it was halting operations — literally overnight. The subsequent economic meltdown redefined the term “bust” in an industry infamous for its boom and bust cycles.

The labor force in the Grand Valley dropped from 50,000 to 42,000 in the years that followed and didn’t top 50,000 again until a decade later. Homeowners walked away from their homes, triggering a glut of foreclosures that decimated property values and wreaked havoc on the economy.

But that was then. Exxon is now ExxonMobil, and the lessons learned from Black Sunday make it a safe bet that such a fiasco will never be repeated. Government policies that gave rise to a “rational exuberance” about the promise of oil shale have been discontinued. Back in the 1970s we were overly dependent on expensive foreign oil, so the government created price guarantees, loan programs and incentives to develop unconventional supplies, including oil shale.

Exxon entered the fray in 1980. At the time it was the largest corporation in the world with annual sales in excess of $100 billion. It anticipated six Colony mines, each employing 30,000 workers and producing 8 million barrels of shale oil per day.

And then the price of oil dropped — precipitously. The rest, as they say, is history.

Today, research and development on oil shale production is more about the long term. The shale is still in the ground, awaiting a breakthrough — from technology or changes in global supply — that will make it commercially viable.

Companies big and small have come and gone. Shell and Chevron gave up on their R&D efforts and now ExxonMobil and Natural Soda want to acquire research-and-development leases on federal land southwest of Meeker in Rio Blanco County. The leases await approval of the BLM and the Colorado Division of Reclamation, Mining and Safety.

ExxonMobil and Natural Soda are both proposing in-situ or “in-place”  development projects as opposed to the old mine-and-retort method that Exxon and Unocal used in oil shale’s heyday.

Oil shale derisively has been called “the energy source of the future — and always will be.” The methods to extract the oil have always had a higher cost — both monetarily and environmentally — than conventional drilling. That means the price of oil would have to reach a high-water mark for the oil from shale to compete with other supplies.

Billions of barrels, however, are trapped in the rocks in Colorado and Utah, making it a worthwhile research endeavor. Shale has potential for the company that can “crack the code” and produce oil at a reasonable cost without harming the environment.

To which we say, best of luck ExxonMobil.


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