The story behind The Road to Nowhere
August 23, 2012 Leave a comment
Jeff Hartley, a lobbyist for oil shale company Red Leaf Resources, interviewed with Utah-based NPR affiliate KCPW in early August. Mr. Hartley used the interview to try to spin the facts and deny that the Seep Ridge Road project is a taxpayer-funded subsidy for Red Leaf.
The project, dubbed the “Road to Nowhere” in the Salt Lake City Weekly, cuts through Uintah County and ends at the county border to benefit Red Leaf’s proposed oil shale project and tar sands speculation. Earlier proposals for the road would have gone all the way to I-70 but met stiff opposition in neighboring Grand County.
Let’s be clear. Others in the oil and gas industry would benefit from the project. But without Red Leaf’s heavy involvement, elected officials would not have dumped tens of millions of dollars into the Seep Ridge Road project. Red Leaf was front-and-center in the effort to secure tax dollars for the “Road to Nowhere.”
In November 2007, Red Leaf Founder Todd Dana and Red Leaf VP Laura Nelson gave a presentation before a joint Vernal City Council and Uintah County Commission special meeting. In response to the Red Leaf presentation, Uintah County Commissioner Mike McKee stated one of the “greatest needs” of the Red Leaf project “is the repair of Seep Ridge Road which has heavy traffic.” Fellow Uintah County Commissioner Mark Raymond echoed those sentiments describing the paving of Seep Ridge Road as “big issue” for oil shale development.
In March 2008, Nelson became the lead for the entire energy industry as point of contact for the Independent Petroleum Association of Mountain States (now the Western Energy Alliance).
Just one month later, the Utah Legislature appropriated $2 million for the project. State Rep. Kevin VanTassell (R-Vernal) pushed for the funding and represents the area where Red Leaf’s operation is located. Uintah County spent another $2 million of public funds, while the industry pledged only $1 million. The industry’s funds were allocated for “the estimated cost of preparing an environmental-impact statement and preliminary engineering drawings for an improved road.”
That same year, Red Leaf pledged a modest $100,000 industry challenge grant to help fund the initial expenses for the Seep Ridge Road paving project.
Red Leaf’s investments are paying off. Paving of the Seep Ridge Road began last month and will cost taxpayers $85.5 million.
So far, the project has received $30.5 million from Uintah Transportation Special Service District and $20 million from the Permanent Community Impact Fund Board. Interestingly, Commissioner McKee sits on the Permanent Community Impact Board.
Throwing taxpayer money at oil shale hasn’t worked so well over the last century. Exxon’s Colony Oil Shale Project received a $1.1 billion loan guarantee in 1981, only to go bust one year later. Unocal received $114 million in federal price supports and went bust in 1991.
Hartley told KCPW that the Red Leaf project will be up and running within 18 months, describing the indefinite delay caused by failure to do proper groundwater analysis as a “procedural” step. The larger companies involved in oil shale such as Shell have said that oil shale is at least a decade or more away from commercial viability.
Oil shale companies should prove that the technology works and that scarce western water supplies won’t be ruined in the process. We shouldn’t be throwing any more taxpayer support – in the form of direct subsidies, loans, infrastructure improvements, or bargain-basement royalty rates for public land access – before we know the economic viability of a project.
Buyer beware since this “Road to Nowhere” has the all makings of a huge taxpayer subsidy to another failed oil shale project.