Lessons from the Oil Shale Boom

by Michael W. Childers

With the national election mere days away few issues loom as larger than the economy. Here, in the West, this has meant a focus on energy. Home to some of the largest reserves of natural gas and oil, the West is seeing yet another boom in energy development. But this boom is not without is critics. Many fear that in the past, this surge in development will to come to and end, while proponents that the development of the West’s energy fields is the way to an economic sound future. Perhaps a lesson from the recent past change shed some light on how best to navigate this recent debate over energy and the future of the West.

The energy crisis of the 1970s looms large in the memory of most Americans. To many at the time the solution to the nation’s energy problems lay in a region known as the Green River Formation stretching from western Colorado, eastern Utah, and southern Wyoming. There, trapped in trillions of tons of oil shale, sat more oil than existed under the entire Arabian Peninsula.

The potential of oil shale as a source of energy was well known as early as the late nineteenth century. By the late 1910s government officials came to believe that the Green River Formation would become one of the most important sources of petroleum in the world, leading to President Woodrow Wilson to set aside the region as a National Reserve in 1914. While a brief period of investment ensued in the area, the difficulty of extracting oil from the rock, as well as the cost, proved too great, and the early twentieth century oil shale boom slowly petered out.

Oil shale is rich in a mixture of organic material known as kerogen, which when cooked out of the shale that it is encased turns into petroleum. The problem being that the extraction process is incredibly complicated and so prohibitively expensive. Two methods exist in mining oil shale. The first is to simply strip mine the mineral, and then transport it to a refinery. Beyond the devastation to the landscape such an operation would cause, it is then be necessary to heat the extracted shale to five hundred degrees centigrade in order to produce oil. Such a process is incredibly polluting, producing both solid wastes as well tremendous amounts of green house gases such as carbon dioxide. A second method, called in-situ retorting, involves heating the oil shale in place, and then pumping the kerogen to the surface. While solving the problem of open pit mining, in-situ retorting produces tremendous amounts of nitrogen and other toxins that could potentially poison the ground water.

Besides these immediate concerns, the in-situ requires tremendous amounts of energy, making it economically questionable. In 2005, the High Country News noted that in order to produce 100,000 barrels per day, enough to last about seven-and-a-half minutes at the current U.S. consumption rate, the RAND Corporation estimated that it would require 1,200 megawatts of electricity. “That’s equal to the output of Colorado’s largest coal-fired power plant, in Craig. Producing two million barrels of shale oil per day could require the equivalent of 20 new Craig-sized power plants,” wrote journalist Jennie Lay. Such enormous costs, combined with its negative environmental impacts have long made oil shale more of a dream than a reality for energy producers.

Despite the economic and environmental costs of oil shale, the energy crisis of the 1970s led many major oil companies to invest heavily oil shale. Virtually overnight the rural Colorado communities of Rifle, Silt, and new Castle turned into boomtowns reminiscent gold rushes of the nineteenth century. Both thrilled about the potential economic windfall and yet resentful of the thousands of new comers flooding their towns, locals grappled with rising costs of living as transformative as those found in the state’s growing ski resort communities. Looking to jump into the game, Exxon joined forces with local oil corporation Tosco in building a five billion dollar processing plant near the newly constructed company town of Parachute.

The oil shale boom came to a sudden end in May of 1982, when Exxon pulled the plug on its multi-million dollar Colony Project. Christened “Black Sunday,” the corporation’s closing of the project brought economic ruin to the region.. High paying oil jobs vanished, local banks failed, homes and businesses were foreclosed on.

Oil Shale’s promise, and eventual collapse, was a lesson to all on the damages the West’s boom and bust cycles wreaked on the region’s environment and people. A cycle many feared we might be repeating.

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