Three times the oil in Saudi Arabia on one hand.
Untold water usage and pollution as well as questionable yield on the other hand.
Although the estimated 800 million barrels of recoverable shale oil is spread between three states (Utah, Wyoming, and Colorado), Colorado has become the setting of controversy. There, the shale oil is closest to the surface and likely the easiest to extract.
Although it sounds simple, the controversy over shale oil drilling in Colorado involves many players, opinions, and concerns.
Political Alignment of Planets
If you feel like the talk over whether to drill for shale oil in Colorado sprung up overnight, in some ways, it did. The controversy began as several points in history converged on October 31, 2008. Although global oil demand had already reached astronomical levels and gas prices in the U.S. skyrocketed, on this particular date, Congress allowed a moratorium on shale oil drilling to expire.
Even before the moratorium expired, members of Congress began to debate a new royalties structure to encourage oil shale drilling on public lands. Whereas companies drilling for gas and oil on public land pay 12.5% royalties, shale oil operations would pay 5% for each of the first five years, with an additional 1% each following year thereafter until reaching 12.5%.
With that, several oil companies began to set their sights on Colorado’s Rocky Mountain region.
Ready or Not, Here We Drill
Although ready to drill, oil companies agree that current shale oil extraction technologies are not well-developed.
Shale oil is difficult to extract because it is tucked away in the pores of sedimentary rock. To get it out, the rock must be heated to the point that the oil vaporizes. This can be done by ex situ extraction (digging up the rock and essentially cooking it above the ground) or by a less destructive method, in situ extraction (heating the rock while it is still in the ground). Once extracted, the vapor is collected as condensate and refined into diesel or jet fuel.
Among the oil companies, Shell has completed the most development on shale oil in situ extraction, investing millions of dollars in research. In the Shell method, water gets injected into the ground and frozen. This forms a capsule that surrounds the soil and rock in a 20 to 30 foot thick ice bowl. Then, injection and extraction wells are dug. Hot fluids go into the injection wells and heat the soil to 700 degrees. The oil gets vaporized and moves through the extraction wells to the surface where the condensate is collected and moved to refineries.
To further compound things, it is uncertain how long it will take to refine shale oil after it is harvested. An estimate published in the L.A. Times claims it will still take four years of refining before the oil is ready for use.
Yet even Shell’s extraction method is not fully developed. The company said it wouldn’t know for at least another decade how viable the method is.
Costs? Benefits? Analysis?
The costs and benefits of shale oil extraction are complicated and muddled. Current technologies are recognized as polluting, particularly for groundwater. According to the EPA, the process of heating soil to 700 degrees can release salts, selenium, arsenic, and other pollutants into groundwater.
Also, oil shale drilling is believed to spend water as well. According to some Congressmen, the amount of water spent in oil shale extraction is a fraction of what is spent in corn ethanol extraction. These same congressmen argue that water used in oil shale extraction can be reused on site.
Yet water is a scare commodity in the Southwest to begin with. Colorado’s shale oil reserves are found in the Rocky Mountains, the same place that feed tributaries of the Colorado River. Currently, seven states and 30 million people rely on the Colorado River for its freshwater.
Aside from groundwater issues, there is the issue of energy gained versus energy used. To extract and refine shale oil, an oil company will use one-third to one-fourth of the energy it gains from extracting oil on the actual process. Between 2025 and 2050 when Colorado shale oil drilling reaches capacity, the industry itself will need more than 14 times the amount of energy to operate than was produced in Colorado’s largest energy plant in 2008.
Epilog: Controversy Tug-of-War
Since the moratorium on shale oil expired on October 31, 2008, the country moved forward awarding at least six large research, development, and demonstration (RD&D) leases for the development of shale oil. However, this progress was retracted on February 25, 2009, when Interior Secretary Ken Salazar revoked RD&D leases for oil shale development arguing that they locked in low royalty rates that were unfair to taxpayers and the leases were awarded without a public comment period. The Obama administration will hold a 90 day public comment period before redistributing any RD&D leases.
