VERNAL — The energy scene in rural Duchesne and Uintah counties is important, and not just to Utah, about 80 state lawmakers were told here Tuesday.
"The nation expects a lot from this area of the country," said Andrew Bremner, director of government affairs for the Independent Petroleum Association of Mountain States. The association's members are very active in Uintah and Duchesne counties. Out of the 50 drilling rigs in Utah, 46 are in the Uinta Basin and about 85 percent of those are typically owned by independents.
While oil and gas are the bread and butter of the energy industry in the two counties, state legislators learned during their two-day fact-finding tour of energy-rich eastern Utah that there's a new frontier in energy production: oil shale and tar sands.
Lawmakers were taken by bus Tuesday to see remote sites in Uintah County where oil shale and tar sands abound. Development of these resources is so new that the production process is still in the pilot phase in the United States.
It's estimated there is enough oil shale to provide 400 years of fuel at present consumption, said Dan Elcan, one of the three principals in OSEC (Oil Shale Exploration Co.). OSEC was named by the Bureau of Land Management as its nominee for a 160-acre oil-shale research, development and demonstration program about 50 miles southeast of Vernal.
The goal of the BLM oil-shale program is to promote commercially viable and environmentally sound oil-shale production to augment domestic oil production, Elcan explained to lawmakers.
The oil-shale operations will be headquartered in the White River Mine facility, a $300 million oil-shale mine that was abandoned by its owners after the energy bust of the mid-1980s.
Elcan said his company may be coming to state lawmakers to ask for some incentives when production ramps up to an anticipated 50,000 barrels a day in the beginning of operations.
Temple Mountain Energy, a tar-sands venture not too far from the oil-shale operations of OSEC and Oil Tech, a smaller oil-shale venture operating in the county, would also put heavy pressure on county roads when they are in full operation.
Jim Runquist, a principal in Temple Mountain, talked to legislators about the process of turning tar sands into a black oil. The water needed for the process will come from the Green River, he said.
"It's a lot of water, but it's a closed loop system, and we still have to bring water in," he said, adding the process has to be environmentally sound, unlike tar-sands production in Canada where toxic-waste water pits miles wide abound on the landscape.
The lack of refinery capacity in Salt Lake City coupled with the transportation issue will both have to be overcome, said Runquist.
"We will have 38 trucks a day coming here picking up oil," he told lawmakers. "Salt Lake is going to be filled with oil. There's not enough refineries. We are going to have to go into other states (to refine the oil)."
"It would be very efficient to have a refinery here," he added. But that doesn't appear likely to happen, due to EPA permitting, costs and time factors, according to industry officials.
The impact on the county would be millions of dollars needed to improve and expand roadways and provide new infrastructure with more water piped to remote areas. Local leaders are hesitant to impose further fees on the already heavily taxed and assessed oil and gas industry, said Uintah County Commissioner Mike McKee.
"We realize in local government we have a responsibility," said McKee. "We may need to look at industry to help with these roads. We do believe things are different here as far as industry impacts compared to other areas of the state."
Ron Bigelow, R-West Valley City, co-chairman of the House Appropriation Committee, said the trip to the Uinta Basin was "very beneficial," and would help legislators vote with a greater appreciation of the issues.
"It may or may not change our vote, but when we make that decision, it isn't going to be just a political decision or based on public pressure," said Bigelow.
McKee said additional financial aid to the counties due to the unprecedented energy development calls for a new look at distribution of the oil and gas severance-tax revenue to the point of impact and perhaps revamping the allocation of mineral-lease revenue through the Community Impact Board.
Brad Johnson, R-Aurora, comes from Carbon County coal country and knows firsthand about the high cost of energy development. He said he felt the trip to the Basin will change some minds when it comes to loosening up more state funding for the area. "We're probably moving in the right direction to convince our colleagues," he said.
Curtis Oda, R-Centerville, said the dialogue that was opened with local leaders was the highlight of the visit, but he felt that funding alternatives should be considered to put more of the burden on those who benefit from the services.