After a 32-year run, Royal Dutch Shell’s U.S. operations are pulling the plug on oil shale research in Colorado, noting that the company has spent tens of millions of dollars and learned a lot. The closing of the operations will be a careful, phased exit to maximize environmental and safety considerations in the Piceance Basin in northwest Colorado, Shell said.

Based on the Mahogany Research Project, Shell has learned a number of key things that it has applied to oil shale plays around the world, a company spokesperson told NGI’s Shale Daily. The company expects a long decommissioning and reclamation process before the research site is closed.

Opponents of oil/gas development in the state, such as the Boulder-based Western Resource Advocates, told local news media in Colorado that Shell’s move underscores the conservationist group’s contention that oil shale is too expensive and too hard to turn into a profitable fuel source.

Other companies are expected to continue with oil shale research while shale and tight sands gas serve the current economy’s needs, according to David Ludlam, executive director of the Colorado Oil and Gas Association’s (COGA) West Slope chapter.

“Western Colorado’s oil shale resource acts a bit like an annuity,” Ludlam said. “We continue investing research dollars a bit at a time, knowing one day the investment will pay off. Companies and technologies may come and go, but the energy resource remains in the bank to benefit the future.”

Shell has taken a lead role in oil shale development in Colorado during the past 15 years, producing 1,700 barrels of oil and developing what it characterizes as “the largest freeze wall” to protect groundwater.

“We plan to exit our Colorado oil shale research project to focus on other opportunities and producing assets,” the spokesperson said. “Our current focus is to work with staff and contractors as we safely and methodically stop research activities at the site.

“We have spent many tens of millions of dollars on the project, and we have learned a great deal about oil shale through our many years of research.”

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 Shell spokesperson emphasized that the energy market has changed mightily since the company began its oil shale research in 1981. The company’s research reportedly has focused on an in-situ process, heating the underground rock layers, or kerogen, to separate the oil from the rock.

COGA characterizes oil shale as “rock that turns into oil,” compared with shale oil, which it says is “oil locked in rock.”

Last year, the Interior Department’s Bureau of Land Management (BLM) issued a draft proposal to cut in half the public lands that could be made available in three western states, and limiting activities to early research and development projects for oil shale and tar sands resources (see Shale Daily, Feb. 6, 2012). The preferred alternative in the Draft Programmatic Environmental Impact Statement would make 461,965 acres (35,308 acres in Colorado; 252,181 acres in Utah; and 174,476 acres in Wyoming) available for research and development of oil shale, and 91,045 acres in eastern Utah available for activities related to tar sands.