Feds Clear Way for UT Oil-Shale Project

A top-ranking Interior Department official signed off on the project, and officials said an Alabama-based partnership, Oil Shale Exploration Co., would be offered a lease to work the federal land within days.

The approval from C. Stephen Allred, Interior's assistant secretary for lands and minerals, followed leases the government awarded in December for Colorado projects, where three oil companies plan to produce shale oil by heating layers of rock in the ground.

Utah has the only mining project where oil shale will be brought to the surface, crushed into gravel and fed into a furnace-like retort.

The White River mine near Vernal, 130 miles east of Salt Lake City, was abandoned by three major oil companies in 1985 when falling crude prices made shale oil - long an elusive bonanza in the West - uneconomical. Today's crude oil prices could make oil-shale development more practical.

"We're ready to put the lease on the table," James F. Kohler, solid-minerals chief for the U.S. Bureau of Land Management in Utah, said Monday.

Oil Shale Exploration Co., also known as OSEC, still needs to submit operational plans for its phased testing program.

As part of the lease, Kohler said the government would require OSEC to keep piles of spent shale in lined pits until officials can figure out how to dispose of the waste.

The alkaline tailings have some heavy metals and arsenic and could grow to enormous piles, but production will be limited for years before the company starts any large-scale mining.

One possible solution would be to dump the spent shale back into the mine, he said.