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Oilsands Project Gets Green Light in Utah
The first oilsands project with longer term commercial possibilities in Utah has gotten approval to move forward from a citizen appeal board for the state Division of Oil, Gas and Mining (DOGM). It’s backers say it is the first commercial-scale oilsands project in the United States.
Calgary, Alberta-based US Oil Sands Inc. said it will move forward with its $300 million plans for developing a portion of its 32,005 acres of bitumen leases in Utah to initially produce 2,000 b/d, and over a five-year period ramp up to 20,000 b/d. US Oil Sands now has the go-ahead to start operation at its PR Spring project in northeast-central Utah near the Colorado border in part of the shale-rich Uinta Basin.
“Our [patented] technology is well-suited for staged development,” US Oil Sands CEO Cameron Todd told NGI’s Shale Daily Monday after announcing that the company had prevailed on an appeal by an environmental group challenging a permit issued earlier by DOGM. A citizen’s appellate board upheld the division’s earlier approval of the project, which initially will involve 213 acres.
“Our plans are to develop 20 000 b/d during the next five years, and we expect to start the initial phase some time next year,” said Todd, noting that the longer term expansion will involve additional sites that will have to be permitted through the state oil/gas division. “Essentially each time you go after a new mine area you have to get a new permit.”
Noting that Utah accounts for more than half the U.S. oilsands potential, Todd said the total lease area of 5,900 acres in the PR Spring area held by his company holds a 190 million bbl potential.
“Our project is predicated on a technology that uses a citrus-based biosolvent that greatly streamlines the facilities required for extraction [of the oil], and that means on a dollars-per-barrel of capacity that we’re able to operate about 80% cheaper than conventional extraction techniques used in Canada,” Todd said. He noted that his company’s process does not use any of the chemicals that have come in for criticism regarding alleged water contamination.
U.S. Oil Sands has drilled more than 200 wells on its leases in the Uinta and discovered oil on all of them except three, according to Todd, and the average well encountered its first oil at 20 feet of depth. For any given mine, the company drills down 150 to 200 feet, he said, noting “the oil is pretty pervasive.”
The company has drilled the permitted area with 2-1/2-acre spacing and the rest of the acreage has been drilled with 40-acre spacing, Todd said.
“For a mining and extraction project, this will be the first in the United States,” said Todd, noting that there have been small research/development projects and there have been others using the oil or “tar sands” directly for asphalt in road construction. Oilsands have been mined in Utah for that purpose for more than 100 years, he said.
DOGM issued a permit for the project and it was subsequently upheld by the Utah Department of Environmental Quality’s Water Quality Board. The water board’s clearance then allowed the DOGM Board of Directors — the appellate panel — to hold a hearing, hear final arguments and eventually render its latest decision.
Todd hopes eventually to be trucking oilsands supplies to refineries in the greater Salt Lake City area, and longer term, shipping supplies by rail to West Coast refineries.
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