Panel kicks off tour of state’s oil-shale works |

Panel kicks off tour of state’s oil-shale works

Sen. Pete Domenici, R-N.M., Chairman of the Senate Committee on Energy and Natural Resources, third from left, jokes with Russ George, second from left, Colorado's Director of Natural Resources, as they and Sen. Ken Salazar, D-Colo., left, tour Shell Oil Company's Mahogany Oil Shale Research Project with Shell's Vice President Terry O'Connor near Meeker, Colo., Wednesday, May 31, 2006. The facility under construction in the background is Freeze Wall test site. (AP Photo/Ed Andrieski)

MEEKER – Two senators praised the promise of oil shale on Wednesday as Shell Exploration & Production Co. led a federal delegation on a tour of experimental works meant to bake oil from the ground.Shell is providing the reality check that will determine if any oil company can profitably extract shale oil from layers of hard rock, said Sen. Pete Domenici, R-N.M., chairman of the Senate Energy and Natural Resources Committee.”They are not here to throw their money away,” Domenici said at a test site 60 miles from Meeker, the nearest town, in the middle of desolate Rio Blanco County.Shell is poised to snap up leases on federal lands in western Colorado rich in kerogen, a fossilized material in rock that yields oil when heated. Shell has been working out here for 10 years, and has invested tens of millions of dollars, trying to perfect a method of baking shale oil from the ground using heating rods drilled into layers of rock – an alternative to mining.

Shell is still four years from proving the technology or deciding whether to build a commercial-scale operation, said Terry O’Connor, a company vice president for external and regulatory affairs.”If they can produce oil from shale using their technology at a profit, the reality check will be that in a few years, we will be able to tell the world that we have unlocked for a certain price this great reserve,” Domenici said, above the noise of diesel-powered drills at a football field-size test site.Sen. Ken Salazar, D-Colo., echoed that hope but said he worried about widespread oil shale development spoiling the “gold mine” of tourism.”We have become very much a tourism-based economy on the Western Slope, and we don’t want to do anything in the context of developing oil shale to endanger that sustainability,” Salazar said. “That is why the technology here is so important.”

Domenici and Salazar visited a test site where Shell plans to produce no oil – it’s already done that at another site.Instead, Shell engineers will spend two years trying to maintain an underground “ice curtain” with refrigerated pipes around a cook site, both to repel groundwater and keep oil from slipping away. Shell has applied for federal land leases with the goal of producing upward of 1,000 barrels a day from a more productive site.Domenici planned to preside over a hearing Thursday in Grand Junction. Sen. Orrin Hatch, R-Utah, was expected later Thursday to tour another site outside Vernal, Utah, where Alabama-based Oil Shale Exploration Co. applied for a federal lease to work an abandoned oil-shale mine.Domenici said the federal Bureau of Land Management is set to award experimental, 160-acre leases within months. In Colorado, Chevron Shale Oil Co and EGL Resources Inc. also applied to extract shale oil using a version of Shell’s in-ground approach.

Shell asked for three 160-acre federal plots in western Colorado, but says it would take another year to get state approval to work the land.Domenici and Salazar were on a tour with officials from the Energy Department and Bureau of Land Management.

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