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Colorado, EPA Critical of BLM Review of Utah Oil Shale Project

Regulators with the Colorado Department of Public Health and Environment (CDPHE) told the U.S. Bureau of Land Management (BLM) they are concerned that future emissions from a proposed oil shale operation in neighboring Utah will harm Colorado's ambient air quality.

Meanwhile, the U.S. Environmental Protection Agency (EPA) has accused the Estonian company that wants to develop the oil shale operation in the eastern Uinta Basin of withholding information from the BLM, and urged the bureau to prepare a supplemental environmental impact statement (EIS) for the project.

Oil shale is not the same as shale oil. Oil shale comes from kerogen-rich rocks closer to the surface than shale oil formations. The rocks have to be heated to extremely high temperatures to convert the kerogen into oil. The economics and environmental concerns of oil shale are considerably different from those of shale oil.

The Colorado Oil and Gas Association characterizes oil shale as "rock that turns into oil," compared with shale oil, which it says is "oil locked in rock."

Enefit American Oil, a subsidiary of Estonia's Eesti Energia AS, holds more than 27,243 acres in eastern Utah, very close to the Colorado border, according to the website for its South Project. The acreage includes 18,033 acres of private property, 4,090 acres of state land and 5,120 acres of federal land. EPA said Enefit plans to surface mine between 7,000 and 9,000 acres.

BLM documents show the South Project is one of the largest tracts of privately-owned oil shale property in the United States. The acreage includes approximately 13,411 acres of oil shale containing about 1.2 billion bbl of oil. Enefit has proposed building a mining complex about 12 miles southeast of Bonanza, UT, in Uintah County. The BLM said that at full build-out, the complex would produce about 28 million tons of raw oil shale ore rock per day, and 50,000 b/d of refinery-ready crude oil from the Green River Formation.

At issue are Enefit's plans to develop a utility corridor across BLM-managed public land to support the South Project. The company needs electricity, natural gas and water to produce the 50,000 b/d of crude oil from mined oil shale over the projected 30-year life of the project (see Shale DailyApril 8). Crude oil recovered from the kerogen-bearing rock would be shipped to refineries in Salt Lake City.

Specifically, Enefit has proposed constructing 19 miles of water supply pipeline, eight miles of natural gas pipeline, 10 miles of oil product line, and 29 miles of single- or dual-overhead 138-kilovolt power lines. It would also upgrade five miles of an access road in the area.

Last April, BLM released a draft environmental impact statement (DEIS) for the project. A public comment period on the DEIS ended in June. The bureau said it will review and respond to the comments it received before publishing a final EIS and releasing a record of decision.

In a letter to the BLM, CDPHE officials said that while they appreciated the opportunity to weigh in on the project, "given the magnitude of the oil shale development addressed in the [DEIS], it is essential that reasonable and appropriate measures be put into place to minimize air quality impacts." It asked BLM to evaluate "the full range of environmental impacts on Colorado."

CDPHE added that its Air Pollution Control Division "emphasizes the importance of addressing air quality impacts due to the project's close proximity to areas struggling to meet the new 2015 eight-hour ozone standard. As the project area is within several miles of the Colorado border, the department has concerns about future emissions impacting Colorado's ambient air quality."

In a separate letter, EPA Region 8 Administrator Shaun McGrath said BLM's analysis in the DEIS "falls substantially short" of National Environmental Policy Act (NEPA) requirements.

"Despite the fact that this is a very large project...the DEIS contains very little to no quantitative analysis of the expected impacts," McGrath said. "That omission is even more striking given the available information which suggests that the South Project would have potentially very serious implications for climate change, and has the potential to exacerbate existing impaired water and air quality conditions."

McGrath also said BLM was justified in requesting additional information from Enefit, and took issue with the Estonian company's refusal to provide it. According to the DEIS, Enefit was unwilling to provide more details over its mining operation until it received a decision on the utility corridor from regulators.

"As a result of Enefit's refusal to provide sufficient information to support a quantified effects analysis, the DEIS does not take a hard look at the potential indirect impacts associated with the South Project," McGrath said.

In a statement, Enefit acting CEO Ryan Clerico said BLM didn’t ask for details on its proposed mining activities because they fell outside of the bureau's regulatory scope. But he said the company would continue to cooperate with BLM.

"The decision before the BLM applies solely to the short stretch of federal land Enefit is asking to cross with a utility corridor to serve the company’s planned oil shale project, and not to the project itself…” Clerico said. “Consistent with the federal NEPA environmental review process, the BLM’s DEIS does, however, consider the potential indirect and cumulative effects of the overall project based on a general description of the proposed plan and its key features, which BLM requested and Enefit provided.

"We anticipate the BLM requesting additional information from Enefit in response to the EPA's comments, so that BLM can improve their impact analysis in the final EIS."

U.S. oil shale potential is confined to the Green River Formation, which includes most of the world's kerogen and spans parts of Colorado, Utah and Wyoming. While the formation theoretically holds more than 1 trillion bbl of oil, the Utah Geological Survey estimates only about 77 billion bbl in the Utah portion is economically recoverable.

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