SALT LAKE CITY
An energy startup from Canada on Tuesday defended its plan to launch the first significant U.S. oil sands project in eastern Utah, after opponents argued it would dig up fragile topsoil and pollute groundwater.
The criticism against the Earth Energy Resources Inc. project came during an informal hearing before the head of the Utah Division of Oil, Gas & Mining, who is considering whether to uphold his staff's approval of the company's operating permit.
The Calgary, Alberta-based company insisted it won't pollute anything and will leave Utah's oil sands as clean as beach sand after processing with a citrus-based solvent.
"It will be a good project for Utah," company vice president Barclay Cuthbert testified. "We'll be providing energy that will be used in the state."
The company has obtained government permits to open the first U.S. oil sands surface mine designed for producing bitumen, a tar-like form of petroleum, at a 62-acre pit in eastern Utah. For decades other Utah operators have used oil sands as a poor-man's asphalt, but nobody has tried to produce petroleum from U.S. oil sands on a scale planned by Earth Energy.
The private company with 411 shareholders says it will turn out 2,000 barrels of oil a day after raising $35 million from private equity groups for the plant.
The Division of Oil, Gas & Mining approved a permit a year ago, but the company hasn't posted a reclamation bond needed to obtain the permit.
Division head John Baza held a "protest hearing" Tuesday to take objections from Grand County residents and environmental groups. The groups promised not to file a formal appeal to a state board pending Baza's review.
Opponents said an oil-sands operation that produces so little petroleum isn't worth doing, given the potential damage to public lands. State officials responded that their job was simply to ensure Earth Energy follows environmental rules. The company obtained a lease on Utah's trust lands.
Utah's oil sands will never prove economical, argued Tim DeChristopher, an environmental activist who faces a September trial on felony charges of disrupting the Bush administration's final oil-and-gas auction in Utah.
"This project is a bridge to nowhere," DeChristopher said.
Opponents fear Earth Energy's project is the start of widespread development of Utah's spotty oil-sands reserves, which they say can't be developed responsibly in a semiarid desert.
Earth Energy says it will take 4,000 barrels of water a day to make half as many barrels of bitumen and that it can pump the water from deep underground. Even state regulators questioned whether that much groundwater was available, but said it wasn't their call to make.
The company says it has obtained water rights for the pumping.
John Weisheit, a Colorado River guide and founder of Living Rivers, said the project will be a disaster, and others questioned whether the company could possibly make money on it.
"We're not undertaking this project to go bankrupt," Cuthbert replied. He said the project was profitable with crude prices hovering around $77 a barrel.
Cuthbert added Earth Energy is hoping to "prove our technology" in its first business venture.
Baza said he will decide whether to uphold his staff's approval within a month.