Oil Shale: NW Colorado the Saudi Arabia of America

Why is oil shale on the front burner after 30 years of disinterest? Oil prices have reached over $50 a barrel which makes alternative fuels attractive for development. Between unrest in the Middle East and natural disasters like Hurricane Katrina in the Gulf, U.S. officials and oil companies again are looking at the potential of oil shale with its billions of barrels of oil locked up in rock.The U.S. Department of Energy hired the Rand Corporation to do a study about oil shale’s potential. Here are a few items from that report: 

Oil Shale Development in the United States
Prospects and Policy Issues

Oil-shale deposits in Colorado, Utah and Wyoming have technically recoverable reserves of 500 billion to 1.1 trillion barrels of oil. The estimate – 800 billion barrels – is three times the size of Saudi Arabia’s reserves and enough to meet 25 percent of current U.S. oil demand for 400 years.

Large-scale oil shale development will stimulate a significant increase in the populations of northwestern Colorado and Uintah County in Utah. Even a relatively small development effort, such as might occur during the construction of a few initial commercial plants, will result in a large population influx. Rapid population growth will likely stretch the financial ability of local communities to provide necessary public services and amenities.

About three barrels of water are needed per barrel of shale oil produced. Analysis from the 1980’s indicates that the earliest constraining factors would be limitations in local water supply systems, such as reservoirs, pipelines and ground-water development. A bigger issue is the impact of a strategic-scale oil shale industry on the greater Colorado River Basin. Demands for water will make the earlier analyses regarding oil shale development outdated.

A few hundred thousand jobs will like be associated with the oil shale industry with an estimated production of 3 million barrels of oil per day. These jobs will be where shale oil production occurs or in regions that contain industries that provide inputs to the production process. Half the world’s oil shale resources lie near Grand Junction, Rifle and Meeker.

Critics of this Rand report explain that to produce 100,000 barrels per day, oil shale companies will need to construct the largest power plants in Colorado. One power plant, costing about $3 billion, would consume five million tons of coal each year, producing ten million tons of greenhouse gases.

One million barrels a day would require ten new power plants and five new coal mines. Critics also warn all of western Colorado’s surplus water will need to be dedicated to oil shale production.

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