Colorado - Piceance Basin – Oil Shale Development

State: Colorado
Region: Western Slope

In March 2016, Exxon Mobil announded that it is pulling out of its Colorado oil shale development.The company in November notified the Bureau of Land Management that it was relinquishing its federal research, development and demonstration lease southeast of Meeker in Rio Blanco County, in the Piceance Basin. It had yet to even begin work on the lease, which the BLM granted it in 2012, but it had done off-site work aimed at developing the technology it had hoped to implement.

Observers of the century-long quest to extract oil from the shale rocks of Colorado’s western slope are fond of saying “oil shale is the fuel of the future … and always will be.” Never commercially viable because of the costs and resources needed to heat and extract the kerogen trapped in the rocks, an estimated 2 trillion barrels of shale oil remains locked up – perhaps forever.

Current oil shale development techniques are different from the natural gas operations typically seen in western Colorado. Oil shale is a rock containing kerogen, which must be mined, creating 100% surface disturbance. The rock is then heated to extreme temperatures to separate the oil. The process requires enormous amounts of energy and water in an already dry environment. Development at this scale, combined with existing natural gas leases, would be detrimental to Colorado’s wildlife habitat, water supply and air quality.

Shell has spent an estimated $200 million so far on research, development and demonstration (RD&D) at its Mahogany Research Project in western Colorado. This “in situ retorting” involves heating the rock while it’s still underground and pumping the resulting oil to the surface, but the process has yet to become commercially viable. After spending over $30 million on decades of research, Shell announced it is ending the project.

In 2011 the BLM announced it would reconsider a Bush-era land leasing plan as part of a settlement of a lawsuit by environmental groups in 2009 that challenged the 2008 action. The previous plan opened up 2 million acres of federal land in Colorado, Wyoming and Utah to oil shale and tar sands development before proving that it was even commercially viable.

In February 2012 the BLM announced its preferred alternative, a much more balanced approach, including a 90% reduction of potential lands in Colorado, and only allows research sites for now. Even though this plan is a huge improvement over the last one, it still gives away large amounts of land to an unproven industry, leaving citizens concerned about impacts on wildlife, air quality an dthe demand on water.

Companies continue to jostle for water rights needed for the proposed oil shale extraction which would require roughly half the amount of water Denver Water allocates to its 1.3 million customers annually. In a region dominated by drought and a future showing large water deficits, states are concerned about gambling away their most precious resource for a speculative industry.