Oil shale is a losing investment

The Star Tribune
January 20, 2013, JOY BANNON

Southwest Wyoming offers many things to residents and the state — beautiful terrain, wildlife habitat, recreation opportunities and energy resources. When traveling this part of the state you may have witnessed a trona truck, a family hunting or the sage brush sea that makes up a large part of the landscape.

One thing you probably haven’t noticed is the Green River oil shale formation that stretches from southwest Wyoming into Colorado and Utah.

Oil shale is something that exists, but can’t be realized yet by industry. Oil shale, not to be confused with shale oil, is an energy resource companies would love to extract, but current technology simply can’t provide commercially viable amounts. After many decades of trials, industry remains in the testing stage of profitably extracting oil shale.

Wyomingites are pretty savvy when it comes to energy resources and the difference between them; however, oil shale often gets mixed up with shale oil, even though they are two very different things.

It’s true that these resources — oil shale and shale oil — are poorly named and confuse many folks, including agency personnel and financial investors, let alone the general public. Geographically, Wyoming has shale oil deposits in the northeastern portion of the state while there are oil shale deposits in the southwestern portion. This geographic distinction is helpful to distinguish these two energy resources by their location in the state.

There are many reasons not to confuse these energy resources, but an important one is that shale oil is profitable while oil shale is not. Shale oil contains hydrocarbons and produces crude oil that is often better in quality than west Texas. Shale oil is fairly standard to extract — the use of hydraulic fracturing and horizontal drilling deliver the product to markets across the U.S. While fracking is controversial and has its own set of concerns from a safety and water perspective, this technique is being used successfully in the Bakken formation of North Dakota. In fact, the Bakken has produced so well for North Dakota that the state surpassed Alaska as the number two oil producer in the United States in 2012.

Shale oil would be a good financial investment. On the contrary, I wouldn’t invest a lot of capital in oil shale.

Oil shale is known as the rock that burns. It is a sedimentary rock and when heated to 700 degrees Fahrenheit it releases petroleum-like liquids. Oil shale is very difficult to extract and produce into a useful, efficient energy source. When formed over millions of years, the heat and pressure wasn’t as great as that which made shale oil. Ultimately, since oil shale isn’t a liquid, it requires extreme, consistent heat to produce a useful product.

There are two methods industry has experimented with to extract oil shale — undermining and surface mining. The surface mining approach, from a sportswoman and wildlife advocate perspective, is not worth the effort. The overburden (otherwise known as the surface or landscape) is completely removed to get at the oil shale feet below. This process removes habitat and transforms the area into an industrial zone void of sage brush, wildlife and recreation opportunities.

Additionally, using current oil shale extraction and processing techniques requires a lot of water. Wyoming is arid and water is our life blood. In the last two decades, Wyoming has seen drought conditions that impact agriculture, wildlife, municipalities and recreation.

Allocating substantial water to merely test the viability of a resource that is as-yet not economically viable is an untenable prospect. While technology is improving and some companies are reducing their water usage, multiple barrels of water are still required to make just one barrel of oil.

There are many differences between oil shale and shale oil — mainly the viability of one over the other and their methods of development. Planning is a crucial component to land management and making smart choices prior to leasing public land for development of any kind is integral to proactively caring for healthy ecosystems.

This type of forethought was witnessed last week when the Bureau of Land Management accepted consistency review comments from the governors of Wyoming, Colorado and Utah on their management plan for oil shale and tar sands. Gov. Matt Mead submitted comments which were prudent and well thought out. Of particular note was the support to require research, development and demonstration prior to commercial development of oil shale.

Proving technology before leasing is available is an important planning step, allowing companies time and experimentation to prepare more thoroughly. Before a company takes a project to the development stage, it should demonstrate its ability to generate a product in a responsible and streamlined fashion.

Unproven, haphazard development that includes large quantities of water and strips the landscape of wildlife habitat is not a smart use of Wyoming’s public lands. Southwest Wyoming offers many things to us all, but oil shale development and production simply isn’t part of that picture in this day and age.

Until industry can produce commercially viable amounts of oil shale profitably and with fewer land and water impacts, Wyoming’s public lands shouldn’t be used as capital in a losing investment.


http://trib.com/opinion/columns/oil-shale-is-a-losing-investment/article_7efe19ce-19cd-5e4a-99dc-897aff12216c.html

 
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