Feds Clear Way for UT Oil-Shale Project

The White River mine reaches a relatively thin layer of oil shale 1,000 feet underground. The richest layer is only 58 feet, compared with zones 1,000 feet thick in Colorado that are closer to the surface, where heating the ground is thought to be more practical.

The Interior Department had already determined that projects in Colorado by Shell Frontier Oil and Gas Inc., Chevron USA Inc. and Midland, Texas-based EGL Resources Inc. would have no significant environmental impact.

The government made the same determination Monday for the reopening of the White River mine. The review took longer because officials had to assess the potential of more damaging environmental effects of mining.

Officials got a late start on the review because at first, six companies competed for the right to reopen the White River mine.

OSEC emerged as the winner. It plans to use a rotary kiln to bake shale oil out of a supply of 30,000 tons of rock left outside the White River mine. If the technology works, the company would use the mine to reach more oil shale deep underground.

Dan Elcan, OSEC's managing partner and a Mobile., Ala., commercial real-estate developer, didn't return a message left on his cell phone late Monday by The Associated Press. His partnership is backed by Twin Pines Coal Co. of Alabama and would use Canadian technology.

Environmental groups have shown little resistance to the demonstration projects, but that could change when oil companies seek to mine or heat up larger pieces of federal land, consuming vast amounts of water in an arid region. The oil shale reserves scattered in Colorado, Utah and southwest Wyoming are believed to contain a 100-year domestic supply of oil if it can be unlocked.

Oil shale is said to be "rich" when it contains 30 gallons of petroleum for each ton of rock, but pound for pound that amounts to only 1/10th of the energy of liquid crude oil. Those tough economics have defied efforts at oil shale development for more than a century, most recently in 1982, when Exxon shut down its $5 billion Colony project in western Colorado and laid off 2,200 workers.

"Oil shale has the energy density of a baked potato," said Randy Udall, a skeptic and director of the Aspen, Colo.-based nonprofit Community Office for Resource Efficiency. "If someone told you there were a trillion tons of tater tots buried 1,000 feet deep, would you rush to dig them up?"