Ghosts of ‘Black Sunday’ hover over BLM’s cautious oil shale move

Wednesday’s move by the Bureau of Land Management to proceed with more oil shale leases for Exxon Mobil and two other companies conjured up memories for some of the “Black Sunday” bust of May 2, 1982, when Exxon laid off 2,200 oil shale workers on Colorado’s Western Slope.

Businesses failed, banks foreclosed, whole towns virtually cleared out, and it reportedly was not uncommon afterward to see a car with an”Exxon Sucks Rocks” bumper sticker, referring to the technology that heats shale rock and sand to extract organic kerogen and convert it into synthetic fuel. Never quite perfected, the process that led to Exxon’s Colony boom of the early 1980s was mothballed in a bust of epic proportions.

This time will be different, an Exxon spokesman told the Colorado Independent Thursday.

“The closure of the Colony Project in 1982 was part of a company-wide reappraisal of projects made necessary by sharp changes in energy markets at that time,” said Patrick McGinn of Upstream Media Relations, which represents Exxon Mobil.

“We recognize that the closure nearly 30 years ago had a significant impact on the communities of western Colorado. Based in part on lessons learned from the Colony Project, we are advocating a phased approach to oil shale commercialization efforts today.”

Back in the late 1970s and 80s, in the wake of the OPEC embargo that sent shudders through the global energy market, Exxon predicted that by the year 2000 it would be extracting up to 8 million gallons of oil a day from arid landscape of western Colorado. By some estimates, there is more oil trapped in the rocks of the Green River Formation of Colorado, Utah and Wyoming (1.5 trillion barrels) than can be found in all of Saudi Arabia.

But getting to it is problematic. Even after nearly 30 years the process is not commercially viable, and conservationists say even the research and development proposed by Exxon and other companies is a waste of time, money, coal-fired electricity, and – most importantly – water.

“If oil shale development continues, then folks up here want a guarantee that our water will not be harmed, verified by an independent third party, and that our ranching way of life won’t change,” said Ken Brenner, a rancher and former Steamboat Springs City Council member who in 2008 ran for the state Senate district with the most oil shale potential.

Some studies indicate it takes up to five barrels of scarce Colorado water for every one barrel of shale oil, and a Shell official confirmed to the Colorado Independent that it takes at least three barrels of water. But Exxon by far controls the most water of any of the major oil and gas companies operating on the Western Slope.

Extreme heat is used to extract organic kerogen from shale rock and convert it into shale oil or gas, and the conventional surface retorting process mines the shale rock and applies the heat on the surface. But Exxon and other are working on an “in situ” process that takes the heat directly to the underground shale and requires less water and power.

“We plan to evaluate our in situ technology called Electrofrac (pdf) thoroughly over several years before making any decisions on commercial projects,” Exxon spokesman McGinn said. That likely won’t satisfy some people who lived through Black Sunday.

Engineering professor and former oil shale worker Craig Thompson said in a release that “No one has found an economic solution [for commercially extracting shale oil]. When Exxon pulled the plug on their $5 billion gamble and laid off 2,200 workers, the West learned a bitter lesson. The last thing we need is another pipe dream and another economic ‘bust.’”

The former Exxon company town established for the Colony project, Battlement Mesa, took decades to recover and is now in the crosshairs of a natural gas play by Denver-based Antero Resources, which wants to drill up to 200 wells in the community. Residents there are concerned about the potential health impacts.

But the boom and bust nature of fossil fuel extraction, often a divisive political issue on the state’s Western Slope, can leave lasting physical and financial scars on the landscape. An entire rural electrical co-op based in Montrose went under in the speculative spree that screeched to a halt with the death of the Colony project.

And the Obama administration is taking a much slower approach to oil shale research than the Bush administration, reducing the size and length of the R&D leases.