BLM issues plan for heavy-oil research

by on November 10, 2012 12:00 am BST

The plan will open up nearly 700,000 acres in Colorado, Utah and Wyoming and another 130,000 acres in Utah for activities related to oil sands.

The Bureau of Land Management (BLM) awarded leases to supermajor ExxonMobil and baking soda producer Natural Soda Holdings, each of whom submitted proposals for the in-situ development of oil shale on adjacent 160-acre parcels in Rio Blanco County near Meeker, Colorado.

The final plan was amended since an original proposal in 2008 based on environmental impact assessments. The leases will go into effect on 1 December.

“Today’s leases demonstrate our continued commitment to encouraging research and development that will help fill in some of the existing knowledge gaps when it comes to technology, water use and potential impacts of commercial-scale oil shale development,” said Helen Hankins, the state director for BLM’s Colorado unit, which also signed two leases for research into developing oil shale resources on a commercial scale.

“To date, technological and economic conditions have not combined to support a sustained commercial oil shale industry, and this plan lays a strong foundation to explore oil shale’s potential,” Hankins added in a statement.

Oil shale, unlike shale oil or shale gas, contains heavy kerogen, which is processed using extremely high heat and pressure to yield petroleum-like liquid.

Oil sands contain bitumen, a heavier type of crude that can be refined into oil. Unlike oil sands deposits in Canada, which are “water wet”, US resources are “hydrocarbon wet” and require different processing techniques.

ExxonMobil spokesman Pat McGinn told the Associate Press in August that the company planned to hydraulically fracture the oil shale, fill the fractures with an electrically conductive material and heat it with electricity. It would then convert the kerogen to oil and gas, produced through conventional wells.

Colorado-based Natural Soda told the news wire it plans to use a process developed in Australia to liquefy low-grade coal. It will attempt to use superheated water combined with other substances to extract oil from kerogen, the AP reported.

The Green River formation, which underlies parts of Colorado, Utah and Wyoming, holds an estimated 1.2 trillion to 1.8 trillion barrels of oil reserves, with about 800 billion barrels potentially recoverable, according to US government estimates.

The original plan to open up the heavy-oil reserves, first issued by the Bush administration in 2008, was tweaked after some lands were designated as “areas of critical environmental concern”. The revised plan, reflecting information from state wildlife agencies, is aimed at protecting sensitive species such as the sage-grouse.

The new plan also takes into account concerns over the potential impacts to scarce regional water supplies.

Proponents of the oil and gas industry were not happy with the revised plan.

Wyoming senator John Barrasso, a Republican, criticised the plan to “vastly reduce the acreage available for oil shale development”.

“After promising repeatedly during the campaign to support all of the above energy development, the Obama administration has just done the exact opposite,” Barrasso said in a statement. “The Obama Administration should cancel this plan and work with Congress and Governors on solutions that will create jobs and strengthen our energy security.”

American Petroleum Institute spokesman Reid Porter said in a statement: “This is another step in the wrong direction that limits development and investment in one of the nation’s most energy-rich areas and goes against a prior government decision that would allow for research and development over a much wider geographical area.”

Separately, The US Environmental Protection Agency has filed an invitation on the Federal Register for the public to submit data and scientific literature to inform ongoing research on the potential impacts of fracking on drinking water resources.

Data and literature submissions are due 30 April 30.