Interior Department clears way for experiments in extracting shale oil in Colorado

Tuesday, November 14th 2006, 6:11 am

By: News On 6

DENVER (AP) _ Companies hoping to tap an estimated 100-year supply of shale oil locked in rock formations under Colorado, Utah, and southwest Wyoming have won federal approval for experimental extraction projects.

Not since the 1980s have companies been as interested as they are now in extracting oil from the rock, which has historically been a laborious and expensive process.

The Interior Department authorized 10-year leases for Shell Frontier Oil & Gas Co., Chevron USA and EGL Resources Inc. for 160-acre parcels for research and development projects in northwest Colorado.

The companies must submit detailed development plans, monitor groundwater, and obtain all required permits to protect air and water quality, the department said Monday in its decision.

The projects could begin as early as next summer.

Since 1996, Shell has tested procedures on private land in western Colorado that involve baking shale rock in the ground with electric heating rods, then pumping the melted oil to the surface. The plan is to circulate refrigerants such as ammonia dioxide through underground pipes to freeze adjacent areas to keep groundwater away from the melted oil.

Earlier this year, the Bureau of Land Management declared the projects would have no significant environmental impact. In authorizing the leases, the Interior Department agreed with that assessment.

``These R&D projects will allow us to test our belief that we have the knowledge and expertise to develop this resource effectively, economically and with the responsibility to the environment and to local communities,'' said C. Stephen Allred, assistant Interior secretary for land and minerals management.

Still unresolved, however, are concerns voiced by some state and federal agencies and environmentalists that the Bureau of Land Management understated or failed to adequately analyze threats to air and water.

There wasn't enough information about the effects on streams and groundwater to ensure protection of fish, including Colorado River cutthroat trout, listed by the state as a species of special concern, the Division of Wildlife wrote in comments to the bureau.

The wildlife division and the U.S. Geological Survey also said information was inadequate on the kinds of substances that will be released by the extraction process.

``I'm concerned that the BLM didn't take seriously the comments that various experts expressed,'' said Bob Randall, staff attorney for Western Resource Advocates, an environmental law and policy group.

Bureau spokesman Vaughn Whatley said such concerns prompted the agency to take a ``hard look'' at the data, but didn't change the overall environmental analysis.