New Push For Oil Shale Is Continued Failure

On May 1, 1982, nearly 10,000 people worked at Exxon’s Colony Oil Shale project on Colorado’s Western Slope. Twenty-four hours later, Exxon shut the Colony project down. Thousands of people were left jobless and the region’s economy was devastated. This week marks 30 years since the disaster at Colony; what was to become known as Black Sunday.

While Colony is the most dramatic example of the failure of oil shale as a commercial energy source, it’s far from the only one:

  • In 1991, Unocal closed the country’s “most successful” try at an oil shale project in Parachute Creek, Colo. After a decade of trying, the project had swallowed tens of millions of dollars in taxpayer subsidies, and Unocal lost $7 million.
  • In 1981, Chevron and Conoco Shale oil began work on their Clear Creek project, located on a private 25,000-acre site north of De Beque. Construction at the site was halted in 1984.
  • In the 1970s, four companies acquired a federal prototype C-b oil shale lease. The lease was suspended in 1987 and pumping on the production on the lease was stopped in 1991. No oil was ever produced from this lease.

Time has apparently healed oil company wounds for politicians to push this failed resource. There is a new push to drill for this unproven energy source. Spearheading this push is a handful of Congressional heels, Rep. Doug Lamborn (R-Colo.), Rep. Scott Tipton (R-Colo.) and Rep. Mike Coffman (R-Colo.). They recently teamed with Speaker John Boehner to push Lamborn’s PIONEERS Act through the House.

The giveaway is a continuation of a 100-year sink of tax dollars and public lands used to develop oil shale. All have failed. Yet today, industry lobbyists, and the politicians that take money from them are trying to throw more good taxpayer money after bad in an effort to distract from rising gas prices and increase government handouts to oil and gas companies.

Oil shale itself is a misnomer. It is actually rock containing an organic substance called kerogen. The rocks haven’t been in the ground for enough time or under enough pressure to become oil. Oil companies need to recreate geological forces to produce any energy from it. Ideas for developing oil shale have included baking acres of land at 700 degrees for three to four years and even detonating an atomic bomb underground.

The lack of an efficient way to create energy from this rock – which has the energy density of a potato – hasn’t stopped oil companies from using it as a reason to spend money to snatch up public land, or politicians from giving it to them.

If Lamborn, Tipton, and Coffman have their dithers, they would create a host of new giveaways to oil companies such as:

  • Over 2 million acres of public lands for oil shale speculation, even though the oil industry has said, on the record, that it will be at least until 2020 before they know whether commercial oil shale is even possible.
  • “Bargain basement” oil shale royalty rates of 5 percent (compared to a rate of 12.5 percent for onshore oil and gas and 18.75 percent for offshore oil) which would slash revenue to the federal treasury and for local governments, who need the funds to offset the associated costs of energy development such as new roads, utility lines, schools, and fire and police services.

Oil companies themselves have admitted that oil shale is an unready energy source. In fact, Shell Oil, which is recognized as a leader in oil shale research, says the earliest that commercial oil shale technology could be available is next decade, and possibly later: “A commercial decision would be in the middle of the next decade and possibly later depending on the sequence and outcome of research activities.”

Far more valuable to these companies than any potential profit they might receive from extracting a non-cost competitive energy source is the ability to increase their claims to Western lands. Oil companies already have permits to drill on 38.4 million acres of public BLM land, an area larger than the state of Georgia. Of that land, 57 percent remains unused. Congressmen Lamborn, Tipton and Coffman should tell their oil industry benefactors to use the land they have before pushing a bill that would give more of our public land to oil companies for a return that is the equivalent of small potatoes.

 

Chevron backs out of oil shale development

On Wednesday, The Colorado Independent reported that Chevron was pulling out of oil shale development in western Colorado.

“Chevron has notified the Bureau of Land Management (BLM) and the Department of Reclamation, Mining and Safety (DRMS) that it intends to divest its oil shale research, development and demonstration lease in the Piceance Basin in Colorado,” the company announced Tuesday. “While our research was productive, this change assures that critical resources — people and capital — will be available to the company for other priorities and projects in North America and around the globe. We will work with the BLM and DRMS to determine the best path forward, timing and other issues.”

This comes just weeks after the House passed the PIONEERS Act, which included H.R. 3408 – a bill that pushed for oil shale development and research as a method to fund the transit bill. Yet, as we all know by now, oil shale has failed to become a viable, commercially-sound energy resource and the Congressional Budget Office (CBO) said it would not produce any revenue.

[The CBO] projected that Boehner’s bill would, over 10 years, leave the highway trust fund $78 billion in the red, and the Interior Department is looking at slashing the amount of land available for oil shale research to 462,000 acres.

While Chevron recognizes that oil shale is not worth the millions of dollars in wasted research and development, others, including Rep. Doug Lamborn do not get this.

“Oil companies have been trying to pull the sword from the stone for nearly a century. Oil shale has no King Arthur,” said Matt Garrington of the Checks & Balances Project. “Chevron’s decision to pull out of oil shale is yet another reason why [U.S. Rep. Scott] Tipton [R-Colorado] and Lamborn should quit saying that melting rocks into oil will somehow fund critical repairs to our roads and bridges.”

#oilshalefail

If you’re having trouble viewing the video, watch it on our YouTube or Vimeo pages.

Update 2/15/12, 6:34 PM EST: Co-director Matt Garrington’s statement on the failure of the Polis amendment which would have struck Lamborn’s oil shale boondoggle from the highway bill: “We applaud Rep. Polis for recognizing the failure of H.R. 3408 and the fact that oil shale is not ready for prime time. Speaker Boehner and Rep. Lamborn should quit trying to sell the American public on their ‘0-0-0 plan.’ The truth is — there is zero energy, zero revenue, and zero jobs in oil shale.

Click the following links to watch Polis and Lamborn debate:
Polis 1
Polis 2
Lamborn 1
Lamborn 2

UPDATE: We’ve gotten word that Speaker Boehner is planning to group all three energy bills under the PIONEERS Act banner. He’s trying cover up the fact that oil shale creates zero energy and zero revenue. Boehner and Lamborn are trying to keep people from realizing that HR 3408 won’t fund anything, but it will give two million acres of land to oil companies, and knock down royalties if the rock ever is developed.

He’s pushed the rule vote on the PIONEERS act up to tonight. He’s trying to pass oil shale separately from the rest of the highway bill. He’s hoping nobody will remember that oil shale has been a money pit for 100 years.

Remember, CBO scored PIONEERS as having no effect on revenue, meanwhile the Speaker’s been saying it’s one of HR 7’s funding sources. He has to try and change the landscape.

Help spread our new video around, so that people can learn the facts about oil shale, and what Speaker Boehner and Rep. Lamborn are trying to sneak past us.

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Speaker of the House John Boehner is bringing his controversial highway bill (H.R. 7) to the floor this week. As you may have read in these pages (or plenty of others) the Speaker has identified Rep. Doug Lamborn’s oil shale boondoggle (H.R. 3408) as one of his funding sources.

Since oil shale doesn’t actually generate any money, we thought pointing out the truth behind Boehner’s and Lamborn’s bills was worth a new Checks and Balances Project video.

It’s bad enough that Lamborn’s bill actually creates a new subsidy for oil companies by setting “bargain basement” royalty rates for oil shale. And that it would hand over two million acres of public land to oil companies for the sake of oil shale speculation and mandate commercial leasing on 125,00 acres of public lands even though there is no commercial oil shale industry.

But now the Speaker is saying that we will pay for millions of dollars’ worth of repairs to highways and bridges with revenue from oil shale.

The problem with that plan is that oil shale creates zero revenue. And for that matter, zero energy and zero jobs.

In 100 years, oil shale has never been commercially developed in the United States despite billions in taxpayer-funded research and development handouts to industry.

In fact, Shell Oil, which is recognized as a leader in oil shale research, says the earliest that commercial oil shale technology could be available is next decade, and possibly later.

“A commercial decision would be in the middle of the next decade and possibly later depending on the sequence and outcome of research activities.” – Shell Oil website

Last week, the Congressional Budget Office reported “the legislation would not affect revenues” and projected zero revenue between 2012 and 2022.

Even Lamborn admitted to Allison Sherry at the Denver Post that oil shale “is not a real contributor to the highway transportation needs we have.”

So in addition to our video, I sent a letter to Speaker Boehner and Rep. Lamborn. In the letter I asked a very simple question:

My organization wishes to know how H.R. 3408, which will generate zero oil shale “revenue,” is intended to fund desperately needed repairs to our nation’s crumbling roads, highways, and bridges.

I’m hoping to hear back from the Speaker or Rep. Lamborn soon, but I’m not holding my breath.

The facts are clear. If America tries to fund highway repairs with oil shale revenues, we’re just looking at an increase in deficit spending. We need to spread the word, so people are educated. Watch our video. Share it with your friends.

And whenever you’re tweeting or facebooking, use the hashtag #oilshalefail. If we work together and make enough noise, maybe we can drown out the spin and rhetoric politicians are putting out there on oil shale.

NRDC: CBO Concludes that Oil Shale Fail Equals Transportation Fail for the Boehner Package

As The Checks and Balances Project reported earlier this week, the Congressional Budget Office (CBO) has determined that Rep. Lamborn’s oil shale bill would yield zero revenue. But prior to CBO’s evaluation, Lamborn seemed to echo the same conclusion:

The fact that oil shale would not be able to contribute to the nation’s financial future did not seem to faze the primary sponsor of the PIONEERS Act, Representative Doug Lamborn from Colorado, who admitted to the Denver Post last week that oil shale “is not a real contributor to the highway transportation needs we have.” A remarkable pivot given that when the PIONEERS Act was introduced in November, Lamborn stated that one of the critical points of the bill was to “…create good paying American jobs and generate new revenue without raising taxes on families and small businesses.”

The National Resources Defense Council (NRDC) reported, “the very reason the Boehner package exists, is to generate revenues through increased drilling in order to cover a budgetary shortfall in the nation’s transportation funding.” Lamborn committed quite the “oil shale fail” prior to next week’s floor vote, which was already “uncertain.”

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