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Two More Colorado Oil Shale RD&D Projects Given Green Light

Oil shale research, demonstration and development (RD&D) in Colorado is expanding following tentative federal approval of two projects, including one by ExxonMobil Corp.

The tentative approvals for ExxonMobil and Natural Soda Holdings Inc. were given last week by the Bureau of Land Management (BLM) White River Field Office (WRFO).

Oil shale development in the United States, unlike shale oil production, is several years away, according to the BLM. Oil shale formations are similar to Canada's oilsands or tar sands in that they produce heavy oil. In 2008 BLM made close to 1.9 million acres of public lands potentially available for commercial oil shale development and 431,224 acres for tar sands leasing and development.

The proposals by ExxonMobil and Natural Soda represent "an opportunity to develop domestic energy sources and to inform and advance knowledge of commercially viable production, development and recovery technologies of oil shale resources consistent with sound environmental management," a WRFO spokesman said. "It also will provide a basis for informed future decisions about whether and when to move forward with commercial scale development and allow for the assessment of its impacts on the environment."

BLM already has approved "proof of concept" projects for Chevron USA Inc., Shell Frontier Oil and Gas Inc. and EGL Resources Inc. ExxonMobil's application, and that for Natural Soda, were submitted two years ago (see Shale Daily, May 23, 2012). The tentative BLM OKs still require a review by the Colorado Division of Reclamation, Mining and Safety.

The two newly approved projects, like previous approvals, are for 160-acre parcels, with up to 480 more acres for possible conversion to a commercial lease.

ExxonMobil estimates that it has 600 million bbl within its Colorado oil shale leasehold. According to the RD&D concept, oil shale would be developed southwest of Meeker, CO, in Rio Blanco County. Plans are to combine hydraulic fracturing with in situ processing, by heating the oil shale underground, filling the fractures with a conductive material, and then extracting it electrically. The first step would be to appraise the prospects with test wells. Groundwater monitoring wells would test water quality before work begins.

The producer emphasized its desire to take a "prudent, step-by-step approach" to the oil shale endeavor.

"It is recognized that development of a commercially viable in situ oil shale technology will require a paced approach to thoroughly evaluate and optimize technology viability, with appropriate focus on environmental protection, water conservation and responsible land use," ExxonMobil's plan stated.

Following appraisal drilling, three experimental phases would follow. The first would establish the ability to install technology in the test zone, with the second to heat the zone. A third phase, the pilot test, would determine commercial viability on a field scale.

"ExxonMobil has consistently proposed a staged and deliberate development program that allows for technical advancement while minimizing the potential for environmental impacts," it stated.

Natural Soda's proposal is to inject hot water underground to solution-mine for baking soda, known as nahcolite. The nahcolite would be removed using a standard manufacturing process. The company then wants to attempt to produce oil shale by heating it using a downhold burner or a closed-loop steam system. Its phased approach would begin with a monitoring well to be drilled as soon as this year. After the well is drilled, the company plans to build processing facilities, heating elements and expand/replicate the process for up to nine years.

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