The U.S. Bureau of Land Management narrowed the field of oil companies hoping to exploit vast oil-shale reserves in Utah and Colorado, government officials said Monday.
In a second elimination round, Exxon Mobil Corp. and a tiny Utah company, Oil-Tech Inc., were knocked out of the running for research and development leases to work 160-acre parcels of BLM land.
Exxon wasn't prepared to commence research for years — as late as 2014 — for a government program meant to expedite experimental works by this summer, said Jim Edwards, chief of the solid minerals branch of the BLM in Colorado.
Oil-Tech failed to advance because of uncertainty over how it would work an abandoned mine and control furnace emissions and runoff discharges, he said.
That leaves four companies in contention out of 16 that originally submitted applications. Each of the four companies is hoping to win final environmental approvals to set up experimental works on federal lands by midsummer.
In Colorado, the surviving nominees are Shell Frontier Oil & Gas Co.; Chevron Shale Oil Co.; and EGL Resources Inc.
In Utah, Alabama-based Oil Shale Exploration Co. was picked over Oil-Tech to work an abandoned mine. Both companies applied to work the same mine, ensuring one would be eliminated.
The companies provided their best and final proposals, said James F. Kohler, chief of the solid minerals branch for the BLM in Utah.
Oil Shale Exploration Co. 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.
In western Colorado, Shell is seeking approval to work three separate parcels of federal land, subject to environmental reviews. Shell is perfecting a method of baking shale oil from the ground using heating rods drilled into layers of rock, an alternative to mining.
The BLM advanced variations on that "in-situ" technique for Chevron and EGL Resources. Each is seeking approval to work a parcel of federal land that, like Shell's, are inside Colorado's Rio Blanco County.
Colorado's oil-shale deposits can be found closer to the surface than in Utah.
A panel of experts scored the companies based on how their proposals would advance oil-shale technology, promise economic viability and protect the environment.
"They chose another company and that's fine. Congratulations to them. We'll just continue doing what we're doing," said Byron Merrell, a 63-year-old inventor and stockholder in Oil-Tech, who built a retort, or stack of furnaces, outside Vernal.
Privately held Oil-Tech is looking to Utah for permission to mine 1,600 acres of state land.
In a statement, Oil-Tech chief executive Romit Bhattacharya said the BLM program was only "the first of many opportunities to develop domestic sources of alternative energy for our nation's future needs. We look forward to working with the BLM, the state of Utah and corporate entities in ensuring that our shale-to-oil technology plays a contributing role toward our nation's energy independence."
The finalists still have to detail how they will satisfy environmental regulations and reclaim a mine or in-situ site.
A corner of Wyoming also contains oil-shale deposits and could be part of a commercial leasing program, but the only application filed in Wyoming for experimental works was rejected as incomplete early on by the BLM.
Taking direction from President Bush's Energy Act, BLM director Kathleen Clarke is hastening an effort to exploit the West's oil-shale reserves. The reserves are believed to contain a 100-year domestic supply of oil, although it's locked up in layers of hard rock and the technology for economically recovering it is still evolving.
The approval for experimental works will put oil companies in line for leasing larger federal tracts for commercial operations that could start as early as mid-2007.