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GAO: Size of Oil Shale Industry May Be Limited by Water Availability

The oil shale reserves in the Green River Formation are equal to the world's proven oil reserves, according to the federal government.

While the oil shale locked away in the western United States would go a long way towards satisfying the nation's energy demand, producers face a number of significant challenges -- technological, environmental and with water quantity and quality -- before they can convert the deposits to crude oil, according to a new report by the Government Accountability Office (GAO).

The Green River Formation in Colorado, Utah and Wyoming contains about 3 trillion bbl of oil, or an amount equal to the world's proven oil reserves. About half may be recoverable, depending on available technology and economic conditions, the GAO study said.

"The federal government is in a unique position to influence the development of oil shale because 72% of the oil shale within the Green River Formation is beneath federal lands managed by the Department of Interior's Bureau of Land Management [BLM]," said the GAO in the report that was requested by Reps. Bart Gordon (D-TN) and Brian N. Baird (D-WA).

In addition, "the Department of Energy has provided technological and financial support for oil shale development, primarily through the research and development efforts, but oil shale development has been hampered by concerns over potential impacts on the environment, technological challenges and average oil prices that have been too low to consistently justify investment.

"In particularly, developing oil shale and providing power for oil shale operations and other activities will require large amounts of water -- a resource that is already in scarce supply in the arid West where an expanding population is placing additional demands on water. Some analysts project that large-scale oil shale development within Colorado could require more water than is currently supplied to over one million residents of [the] Denver metro area and water diverted for oil shale operations would restrict agricultural and urban development," the report said.

Estimates vary widely on the amount of water that will be needed to commercially produce oil shale primarily because of the unproven nature of some technologies to extract oil shale and because the various ways of generating power for operations use differing quantities of water, according to GAO.

To extract oil, the rock needs to be heated to very high temperatures -- ranging from about 650 to 1,000 degrees Fahrenheit -- in a process known as retorting. Retorting can be accomplished in two methods. One involves the mining of the oil shale, bringing it to the surface and heating it in a vessel known as a retort. The second method, known as an in-situ process, involves drilling holes into the oil shale, inserting heaters to heat the rock, and then collecting the oil as it is freed from the rock.

"GAO's review of available studies indicated that the expected total water needs for the entire life cycle of oil shale production ranges from about one bbl (or 42 gallons) to 12 bbl of water per bbl of oil produced from in-situ (underground heating) operations, with an average of about five bbl, and from about two to four bbl of water per bbl of oil produced from mining operations with surface heating," the report said.

"Water is likely to be available for the initial development of an oil shale industry, but the size of an industry in Colorado of Utah may be eventually limited by water availability."

"Oil shale development could have significant impacts on the quality and quantity of surface and groundwater resources, but the magnitude of these impacts is unknown because some technologies have yet to be commercially proven, the size of a future oil shale industry is uncertain and knowledge of current water conditions and groundwater flow is limited."

As a result, the GAO called on Interior to direct its BLM and U.S Geological Survey (USGS)  to establish comprehensive baseline conditions for groundwater and surface water quality, including their chemistry and quantity in the Piceance and Uintah basins to aid in the future monitoring of impacts from oil shale development.

And it urged Interior to direct the two agencies to model regional groundwater movement and the interaction between groundwater and surface water in light of aquifer properties and the age of groundwater, so as to help in understanding the transport of possible contaminants derived from the development of oil shale.

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