AP News

Shell abandons Western Slope oil-shale project


DENVER (AP) — Royal Dutch Shell PLC has become the latest company to abandon efforts to turn Western Slope oil-shale into oil, joining a long line of companies in a boom and bust cycle in the region.

The company said energy markets have changed since the project started in 1982, and the company no longer wants to continue efforts to turn oily shale rock into liquid by heating the rock and pumping out the oil.

Chevron stopped its oil-shale research in Rio Blanco County in February 2012.

"We are exiting our Colorado project to focus on other opportunities," Shell spokeswoman Kelly op de Weegh said. "Our focus is to work with our staff and contractors to safely stop research activities and close the site."

Efforts to squeeze the oil from the shale in the Rockies stretch back decades. An oil shale boom in Colorado in the early 1980s went bust when oil prices dropped and government subsidies dried up. People still refer to "Black Sunday," May 2, 1982, when Exxon Mobil Corp. shut down a $5 billion project near the West Slope town of Parachute, throwing 2,200 people out of work.

"The economics of oil shale have always been the issue," said David Abelson, an analyst with Western Resource Advocates, an environmental group opposing shale development.

Shell spent an estimated $30 million to create a test subterranean wall to hold in the shale oil when it was heated, but full-scale production would probably have required building a large power plant, the Denver Post reported Wednesday (http://tinyurl.com/qydcqph).

The new oil plays in North Dakota and Texas and along Colorado's Front Range, which are producing large quantities of oil, hurt the viability of oil shale, said Jim Spehar, former mayor of Grand Junction.

"Out here on the Western Slope, oil shale will always be the fuel of the future," Spehar said.

Shell on Tuesday announced plans to build a $12.5 billion plant in Louisiana that would turn natural gas into diesel, jet fuel and other liquids.

"We have a large portfolio of opportunities, all competing for capital," op de Weegh said.

Government and industry officials estimate 1 trillion to 1.8 trillion barrels of oil — up to three times the proven reserves of Saudi Arabia — are locked in rock in parts of western Colorado, Utah and Wyoming. Roughly 800 billion barrels are considered recoverable.

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Information from: The Denver Post, http://www.denverpost.com


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