Surging Prices Raise Prospects for Oil Shales

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GREENWIRE: Tracking Policy, Politics And The Press Monday, • 1 1 , l Surging prices raise prospects for oil shales Ben Geman, Greenwire reporter Page 1 of 2 Soaring energy prices and tight supplies are reviving the interest of industry and lawmakers in tapping vast U.S. oil shale deposits thought to equal 2 trillion barrels worth of petroleum. But petroleum companies -- wary of oil shales after expensive efforts to development them collapsed as oil prices plunged in the early 1980s -- are asking for government incentives because the cost of extracting oil from shale remains daunting. Some lawmakers want to help. Sen. Pete Domenici (R- N.M.), the chairman of the Senate Energy and Natural Resources Committee, said last week he would request a $2 million appropriation for a federal land leasing program in three Western states aimed at spurring research and development. Domenici believes the time may be ripe for shale oil development. "This is increasingly evident as the outlook is not necessarily bright in terms of global oil prices falling any time soon," he said in a prepared statement. "We have vast shale oil reserves, much of it on federal land that could be tapped. Doing so would not only increase our own oil production but increase royalty payments to the government." Dominci's committee will take up the issue in a hearing tomorrow, as experts say industry seeks ways of tapping what Exxon Mobil Corp. calls "an abundant, but technically and economically challenging" resource. Peter Crawford, an analyst with the energy consulting firm Intek, believes industry interest is growing. "It accompanies the price increases and the projections and prognostications about potentially reaching peak oil production in the not - too - distant future," he said. Oil shales are sedimentary rock formations containing hydrocarbons that can be extracted through heating the stone. The United States is believed to have 2 trillion barrels worth of oil in shale deposits. By contrast, the Arctic National Wildlife Refuge is thought to contain between 5.7 billion and 16 billion barrels of oil according to federal estimates. Oil shales attract -- and scare -- industry But tapping oil shale reserves economically -- and with environmental sensitivity -- presents huge challenges. Shell Exploration and Production Co. currently has an active field research program in Colorado that uses the "in- situ" approach -- in other words, the process heats the shales underground rather than by bringing them up to the surface through mining. Hoping to speed new technological advances, the Bureau of Land Management is planning to lease public lands tracts in three Western states -- Colorado, Utah and Wyoming -- for further research and development and sought comment on the plan last year. Shell and Exxon Mobil are the two major oil companies that commented on the plan. Shell process involves drilling holes and then placing electric heaters underground, which heats shale formations http: / /www.eenews. net /Greenwire /include /print.php ?single = 04110501 4/11/2005