From the Cheap Seats: Even by Communist Standards, Obama Oil Shale Rules May Prove Stifling

March 20, 2012

Shell remains active in oil shale research and development

Here are some facts that are helpful in understanding the stakes and the tactics of the great oil shale debate in Colorado.

1)       The idea, fashionable of late, is that heating kerogen-bearing rock deep below the surface can supply vast amounts of liquid fuel, from jet fuel to diesel. Royal Dutch Shell is working on the process and has just now broken ground on one of its three 160-acre leases of land managed by the Bureau of Land Management in northwest Colorado.  Shell’s leases are for 10 years, so it’s halfway through its research, demonstration and development lease.

2)       If its process works, Shell will pull kerogen from the earth five to seven years after beginning to heat the rock deep beneath what amounts to an undisturbed surface.

3)      So the process of dealing with the lease and the bureaucrats who oversee all has taken almost as long as it is expected to take to heat rock to produce an oil-like substance.

4)      This scenario has taken place under a system put together by the George W. Bush administration, which started the process of trying to develop oil shale as part of a strategy to achieve energy independence.

5)      The environmental process envisioned by the Obama administration is not aimed at actual development of oil shale, at least not with the alacrity envisioned by the Bush administration.

Speed isn’t the only issue. So is acreage.  The Bush administration set aside 2 million acres in three states:  Colorado, Utah and Wyoming.  The Obama administration wants a mere fraction of that amount of land set aside.

The preferred alternative in the draft EIS now under study, only 461,965 acres would be available for research and development of oil shale. Colorado would see the fewest acres, 35,308, followed by 252,181 acres in Utah, and 174,476 acres in Wyoming.

The logic is that Colorado needs the least amount of acreage because its resources are thickest, as well as deeply buried.  Utah has shallower resources spread more widely. Wyoming’s thin layers are the least attractive, though they tend to be closer to the surface.

A company based in Estonia is working on oil shale in Utah and another is working on a federal lease in the Beehive state on a process of digging up rock, heating it in a capsule on location and replacing it where it was found.

Five of the six leases granted so far are in Colorado, however, which tells you that the stuff that matters is in the sparsely populated – unless you count prairie dogs and gnats – northwest corner of Colorado.

Which brings us back, inevitably, to Shell, which described the new environmental study sought by the Obama administration as a “waste of taxpayer money.”

Shell has begun work on one of its federal leases, as previously noted. That means it has yet to work on its two other leases, so Shell is working only on 33 percent of its federal leasehold.

A fourth Colorado lease is being worked by American Shale Oil, which is backed by the French fuel supplier Total and a spinoff from a New York-based communications company, IDT, chaired by Howard Jonas.

AMSO, as it’s known, is plugging away, literally, finding ways to get heat down-hole and boil out kerogen.

Chevron, as has been previously noted, has opted out its lease in a move hailed by environmentalists as a concession to the futility of oil shale development.

Perhaps.  Oil shale is by no means an easy play, otherwise it would have been developed long ago.

To be sure, though, ExxonMobil remains interested in obtaining a federal lease in Colorado, where the company hopes to use horizontal drilling to heat rock below the surface.

Natural Soda, which already is working in western Colorado producing nahcolite, better known as baking soda, by solution mining.  Natural Soda already is working in oil shale country, so it makes sense that the company branch out into shale.

The final player, AuraSource Inc., which is backed by China – that’s Red China, as in the People’s Republic of – made a splash when it announced its interest.

ExxonMobil, Natural Soda and AuraSource all are in completing environmental reviews of their proposals under rules set up by the Obama administration.

The timeline for the Obama administration’s do-over on oil shale could rule out lands that the last three companies might wish to lease before their environmental studies are done, the BLM has said.

Of course, the BLM decides what happens when, something that might have eluded observers, but not people who have to make actual financial decisions.

Should AuraSource back out, then the Obama approach to oil shale will have demonstrated that it was able to drown died-in-the-wool communists in bureaucracy, which is no mean feat, but one that is unlikely to get a lot of attention from a foot-dragging Obama administration that seems wholly uninterested in domestic energy development.

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