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Estonia company wants to pull 2.6 billion barrels of oil from Utah

VERNAL — An Estonia company that has turned oil shale into fuel oil during the past 30 years wants to mine rock from a remote region of the Uintah Basin, tapping 2.6 billion barrels of oil in the decades to come.

That staggering production, 50,000 barrels of oil per day, would represent one-third of Utah's liquid fuel consumption and is touted to emerge from a processing and refining plant that would put power back into the energy grid.

Enefit American Oil, the American subsidiary behind these numbers, is banking on new technology at one of its recently debuted plants in Estonia to take Utah's oil shale and turn it into big money for the company, Uintah County and the state of Utah.

Oil shale foes, however, say the company has a poor track record in Estonia, a country that borders Russia, and they point to environmental threats on land and in the air in Utah, and question the drain that the operations could place on the West's scarce water resources.

While Estonia company representatives don't deny the practices of the past, they say technology and environmental stewardship have evolved from when the country was under Soviet control and reflects the work of an independent country with membership in the European Union.

"The main difference between historic activities during the Soviet era and now as the member of EU can actually be concentrated to the following words: higher efficiency, larger reuse and recycling of byproducts and waste, better pollution control monitoring and reporting," said Tonis Meriste, the environmental development manager for Eesti Energia.

Rikki Hrenko, chief executive officer of Enefit American, said critics and the public would do well to remember one thing:

"Not all projects are created equal," she said. "This is what we do. This is all we do. "And we're very confident we can do this in an environmentally responsible manner."

But groups such as Western Resource Advocates worry about the use of water in Utah's arid climate and the emissions that would be produced by Enefit in a region already plagued by winter ozone problems.

"What are the potential impacts on existing business? What are the potential impacts on human health and the environment, on the ability of the state to ensure that water will be available?" questioned Western Resources' David Abelson, who is the organization's oil shale policy advisor. "All those have to be discussed and understood."

Some of those details of the project will be featured in a pair of meetings hosted by the Bureau of Land Management this week.

The project requires the installation of utility lines — such as pipelines for water, power and to convey the oil — and those lines cross BLM-owned land. An environmental impact study will have to be conducted and the BLM is seeking suggestions on specific issues that ought be part of the analysis.

Meetings are set for 6 to 8 p.m. Tuesday in Vernal at City Hall's community room and from 6 to 8 p.m. Wednesday in the level 4 conference room of the Salt Lake Main Library.

Hrenko and her team have already been meeting with advocacy groups like Abelson's and are anxious to describe details of the project, particularly why it is a good fit for Utah. Most importantly, she likes to explain what the project is not about.

"We don't frack," she said. "And we're different than oil sands or tar sands."

Energy in Utah

Fracking, or hydraulic fracturing, is the process of shooting a mixture of water, sand and other materials such as chemicals deep into layers of rock to create fractures. Those cracks then provide channels for gas or oil to move to a well for extraction.

The practice, first commercially successful in the late 1940s and used in the majority of new wells globally, has sparked harsh opposition by critics who link it to groundwater pollution and even earthquakes.

Enefit does not extract shale oil, as in North Dakota's Bakken Play, which is revolutionizing the global market for oil — with the United States poised to cut into OPEC's share as early as next year.

Oil shale mining is a different process than mining tar sands, which in Utah are the largest resources of their kind in the country, but still nothing compared to what exists in terms of oil shale.

Utah's oil shale is within the largest oil shale deposits in the world, located in the Green River Formation that also covers parts of Colorado and Wyoming.

The organic material preserved in the oil shale formed 50 million years ago is not oil, but rather a substance called kerogen that can either be heated at the surface, or underground. The result of heating is the production of crude oil and natural gas.

Estimates by the U.S. Geological Survey are the entire formation holds 3 trillion barrels of oil, of which nearly half would be recoverable. To put that in perspective, that is just about equal to the entire world's proven oil reserves.

In Utah, that number has been put at 1.4 trillion barrels.

Mike Vanden Berg, a geologist with the Utah Geological Survey, said an extensive study done by the agency looked at Utah's own deposits, put constraints on that resource such as depth of the oil shale, land use and economic factors, and came up with an estimate of 77 billion barrels of oil that could be potentially recovered.

"It's not a trillion, but it is a huge resource," he said.

Leases bring jobs

Enefit has secured the leases to the largest oil shale holdings in the state — a little more than 30,000 acres — of which only the south portion would be mined during the 30-year phase. That phase, expected to take 1.2 billion barrels of oil from the south segment, would create 1,200 construction jobs and 2,000 full-time employees once full production begins.

Two thirds of the land, located 45 minutes south of Vernal, is privately owned while other owners are Bureau of Land Management and the School and Institutional Trust Lands Administration. The south segment, where the mining would take place in that 30-year-phase, is all privately owned.

Hrenko said only a few hundred feet of surface area would be mined at one time, and then reclaimed as the mine advances. The super heating of the rocks extracts virtually all the organic material so it can eventually be returned to the land and the topography reclaimed, she said.

No water is used in the actual processing of the oil shale, and the water that is used is for dust supression, she said.

Enefit says they have 10,480 acre-feet of water to the White River, which it wants to trade out to take water from the Green River for use in its Utah project.

Hrenko said the water use would be actually much less than that, with industry estimates that put the requirements for 50,000 barrels of oil per day at 4,000 acre-feet of water per year. An acre-foot of water is typically enough to supply a family of four or five for a year.

"We think it will be less than that," she said. "And all the water will be re-used."

For some, in the face of over-allocated Colorado River and Utah pinched by repetitive dry cycles, any water is too much water.

"The state is going to face some very difficult decisions on how it allocates water," Abelson said.

Pollution worries

The company is doing surface and groundwater monitoring, air pollution modeling and finished a two-year survey on the sage grouse in the project area, of which they said there were none found.

Hrenko said the company hopes to have all its permits in place by 2017 and be producing its first oil by 2020. Full production would begin by 2024.

Last year and continuing into 2013, the company began exploratory drilling and some oil has already been Utah oil shale has been produced at the company's research and development facility in Germany, she said.

Viable commercial oil shale production, which Eneift officials say is proven technology in its home country of Estonia, has yet to be accomplished in the United States.

Abelson said that's at the heart of determining if the plan will be Utah's economic energy boom, or as some critics see it, the state's environmental bust.

"The question remains if these guys can pull it off," Abelson said, noting that Utah rock is different in composition than Estonian rock, so the process may not be difficult. Critics have long blasted oil shale as a failed financial enterprise, but Hrenko likes to point out Enefit is owned by the Estonian government, which already gets 91 percent of its energy from oil shale and is bank-rolling expanded operations to Jordan as well.

Abelson and the organization's attorney, Rob Dubuc, said they will never endorse Enefit's Utah project, and will never be convinced it will bring good things to the state. But they said they appreciate Enefit's willingness to sit down and listen.

"Unlike a lot of the companies we come across in Utah, they see the benefit of talking about these issues with their critics, and I have to give them credit, Abelson said.

Added Dubuc, "They're smart. They are not to be dismissed."

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