Shale oil — now?

Shale oil — now?

Company says $40 per barrel production is possible in Utah

VERNAL — A company says it can produce oil from shale mined from Utah within two or three years, at a cost of about $40 per barrel, and that notion has leaders in Washington, D.C., interested in ways to make it happen.

Sen. Pete Domenici, R-N.M., chairman of the Senate Energy and Natural Resources Committee, on Thursday visited sites south of Vernal where shale could be mined and processed.

"It is potentially part of our future, and it could be a big part," Domenici said. "Enterprise, initiative and innovation are going to drive the investment of money into shale oil, and it's going to produce crude oil."

Romit Bhattacharya, chief executive officer of Oil Tech, gave Domenici an education in shale processing at a remote site that the company currently uses for research.

"There's too many people who say it can't be done. It will be done," Bhattacharya told Domenici.

The company owns land leases for mineral rights on more than 38,000 acres throughout the Green River Formation in Utah. The small research site has already produced oil that can be sold to a refinery. That site could be modified to produce 1,000 barrels a day. Each additional processing site could be built in six to eight months.

Bhattacharya told Domenici that how much shale Oil Tech processes depends on access to available resources. The processing involves heating the shale to extract the oil.

It's estimated that Utah has more oil in shale deposits than there is oil in Saudi Arabia, according to John Baardson, chief executive officer of Oil Tech partner BAARD Energy.

And throughout Utah, Colorado and Wyoming, an estimated 1 trillion barrels of oil are locked in shale, compared with about 700 billion barrels of untapped oil in the entire Middle East, he said.

"It's not going to be boom and bust," Baardson said about the availability of shale resources to sustain oil production in this country.

One fear among skeptics is that interest in shale will go away if the price of foreign oil drops as it did in the 1980s. The difference now, however, is that China and India have become much larger consumers of oil, and the question isn't whether the price will come down, but how high it will go in the future, Baardson said.

Another worry is over the environmental impact that the mining and processing of shale will have on the area.

Baardson said those environmental effects could be mitigated. No water is used in heating shale over 900 degrees to extract oil, and the process actually produces water. Once the oil is extracted, the byproduct could be used to fill in old mine pits or sent to coal-fired power plants to be used in a process that would reduce sulfur emissions, he said. The resulting coal ash could then be used in cement mix or as a gravel substitute, Baardson added.

But it's the difference between $70 a barrel — the current price of imported oil — and $40 a barrel for shale oil that has Domenici excited.

"I'm very optimistic," Domenici said in an interview. "There are people with a passion who want to get something like this done."

The Bureau of Land Management picked Oil Shale Exploration Co. as the sole applicant being considered for a research and development lease at the White River Mine site in Uintah County, which was visited Thursday by Sen. Orrin Hatch, R-Utah. Hatch did not meet with press during or after his trip to the mine, located about 10 miles from Oil Tech's research site.

Two areas within the White River Mine site are said to hold more than 661 million barrels of oil within shale deposits, according to BLM geologist Pete Sokolosky.

In two to three years, at least six companies could produce oil from shale in Utah and actually have an impact on the price of gasoline at the pump, Baardson said. But before any large-scale mining and processing take place in Utah, companies will need to go through an environmental-assessment process and a public comment period.