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Utah Basin Project Stirs Conflicting Energy, Environmental Interests

Serious Canadian energy investment and equally focused environmental interests are warily eyeing each other in and around the Uinta Basin in southeastern Utah, where energy developers see an extension of their oil sands plays in Western Canada, and a group called Living Rivers warns of a potential environmental and public health disaster.

For now the focus is on Alberta-based interests centered on a company named U.S. Oil Sands Inc. that earlier in April secured a third of the $35 million it needs to build the first U.S.-based oil sands project in the Uinta Basin. The same Canadian interests last year secured approval from the Utah Division of Oil, Gas and Mining to start mining operations, which would amount to the first such energy installation in the United States.

Separately the U.S. Bureau of Land Management (BLM) in mid-April announced the start of a multi-state environmental review of oil shale and tar sands plans in Utah and two neighboring states, Colorado and Wyoming (see Shale Daily, April 14).

"We are looking at a 30,000-acre project that will destroy the environment in this area over many years," said John Weisheit, a Colorado River guide and founder of the Moab, UT-based Living Rivers group, as quoted in a report by the Associated Press out of Salt Lake City.

Calgary-based Earth Energy Resources Inc. announced early this year it was buying an inactive Vancouver, BC-based company, LMM Ventures Corp., and renaming it U.S. Oil Sands. It subsequently raised about $12.6 million in a private offering, which is supposed to be enough to pay for the company fully drilling out its Utah land and completing all of the engineering work needed, according to Earth Energy CFO Glen Snarr as quoted April 23 in Canadian business publications.

Snarr said the remaining $22 million would be raised by issuing more equity, and the initial mine would recover bitumen as a start from a 52-acre project (24 hectares) during a projected seven-year life. Little Rivers is strongly opposing development of the initial mine.

While the Little Rivers backers have raised concerns about the local groundwater supplies being contaminated, the U.S. Oil Sands officials claim that they have developed what they described as an environmentally benign process that is water efficient in separating bitumen and heavy oil from sand.

"The Ophus Process is a revolutionary and swift extraction process that uses little water and leaves behind no toxic chemicals or tailings ponds," according to the Canadian firm's website. "The process operates at a low temperature, producing clean sand and water and reducing the cost of extracting bitumen."

Uinta Basin is located south and east of the Wasatch and Uinta Mountains, fed by a number of creeks and rivers that eventually feed into Green River, a tributary of the Colorado River. Although less well known than the Wasatch, the Uinta Mountains include Utah's highest peak, the 13,528-foot Kings Peak. Vernal, UT (population 7,700) is the largest town in the basin.

Last year there was a 33% increase in drilling activity in the Uinta Basin, following the pattern of the more well known Piceance, Marcellus and other basins (see Shale Daily, Jan. 11). Little Rivers, however, continues to push back, contending that Utah's southeastern watershed is not going to be what Weisheit called "a sacrifice zone" for oil and gas corporations.

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