Utah is Home to Deposits of Tar Sands, Another Non-Conventional Source of Fuel and Energy

By Johnson, Frances

In addition to extensive amounts oil shale representing trillions of gallons of potential crude oil, Utah is also home to deposits of tar sands, another non-conventional source of fuel and energy.

Tar sands, sometimes also referred to as oil sands, contain oil that has traveled to the surface of porous rock where light components have evaporated, leaving behind bitumen, a highly viscous hydrocarbon also commonly called heavy oil. Too thick to be recovered by conventional oil wells, bitumen is usually mined, separated from the surrounding sand and clay and upgraded to a synthetic crude oil.

There are decent-sized deposits of tar ,sands scattered throughout eastern Utah, from Lake Powell to Vernal, and the resource could be available more quickly than other nontraditional alternatives.

“I think that will go before the oil shale,” said Alan Isaacson, research analyst at the University of Utah’s Bureau of Economic and Business Research, who authored a study on the potential of Utah’s oil shale resource. “The technological barriers aren’t there.”

Tar sands in Canada are already producing one million barrels of oil a day, Isaacson said, using successful methods that could be applied elsewhere. With announced projects, Canada’s production could soon jump to three million barrels a day.

Just like oil shale, however, there are some problems with tar sands development in Utah. The resource is much smaller than tar sands found in other places, Isaacson said, and the most successful methods being used in Canada require large amounts of water, which is a scarce resource in the state.

Tar sands development in Utah is also facing legal barriers, with a suit recently filed by the Southern Utah Wilderness Alliance (SUWA) against the Bureau of Land Management (BLM), alleging the mishandling of tar sands leases.

At issue are 23 leases located in the Circle Cliff Special Tar Sands Area in Grand Staircase-Escalante National Monument, and the Tar Sands Triangle Special Tar Sands Area, located just west of Canyonlands National Park.

“Both of them include areas that we propose for wilderness protection,” said David Garbett, legal fellow for SUWA, “They are in areas that we think are pristine, areas that should be designated as wilderness areas, that the BLM has recognized as having wilderness characteristics.”

Companies originally held conventional oil and gas leases for this land, Garben said, but no development took place. In 1981, Congress passed the Combined Hydrocarbons Leasing Act, which allows companies to expand the parameters of their leases to include tar sands development, provided a detailed plan of operation is approved by the BLM and the Department of the Interior. The ticking clock on the original leases, which would expire in 10 years, is frozen or suspended while the plan is submitted, considered and approved.

The BLM received plans for the leases at issue in 1983 and 1984, Garbett said, and five leases were immediately suspended. Another 23 applications received during the same time period, however, were never addressed.

“These, the agency did not suspend,” Garbett said. “They submitted the plan and the agency didn’t do anything.”

In October 2006 and January 2007, the BLM moved to retroactively suspend the 23 disputed leases, effective 1983, despite the leases having legally expired in the early 1990s. The basis of SUWA’s suit, Garbett said, is that the BLM did not have the authority to take that action.

“The fact that the BLM didn’t do anything means that the leases expired,” he said. “Just as a matter of law, these leases have expired.”

Because the issue is in litigation, the BLM declined to comment on the case. But according to James Bunger, president of JWBA Inc., an energy consulting firm in Salt Lake City, the cause for the BLM delay could be anything from a lack of adequate process to a lack of diligence to a question about the Congressional intent surrounding the law. Whatever the reason, he said, companies should not be made to pay the price.

“If they attempted to make the conversion and they had the application and the BLM, for whatever reason, didn’t process that, I think it’s fair for the BLM to reinstate leases for those leasees who filed an application in good faith,” he said.

Responsibility to ensure the application process is completed in a timely manner ultimately rests with the companies involved, Garbett said. Companies can also file a suspension application even if they have not yet submitted a plan for nonconventional resource development but think it might be a possibility. None of the companies whose leases are at issue did that, he said.

“It’s probably just the fact that the market wasn’t there. There was no motivation from the companies, so the BLM didn’t have any interest in seeing it through,” Garbett said. “This case is especially egregious because some of these leases expired 20 years ago. So to say, ‘We’ve been sitting in our office for 20 years just twiddling our thumbs, waiting for that letter from the BLM,’ courts just don’t buy that.”

The remoteness of the disputed areas, which can only be reached by driving for hours on dirt roads, make the economic feasibility of development unlikely, and the resource itself also has a questionable economic reward, Garbett said. But, according to Bunger, obstructing development of nonconventional resources in these early stages could have longterm negative consequences.

“They claim to be talking for the public,” Bunger said of SUWA, “but they’re really setting up the public for a big fall. We won’t have the resources when we need them.”

Traditional resources are dwindling, Bunger said, and the country’s ability to import the necessary oil is declining, but companies will avoid developing new and additional resources until the risk in doing so has been reduced and SUWA represents a risk.

“The idea is to discourage investment. That’s their objective and they’re being successful,” Bunger said. “As long as there’s an uncertainty about the timing of your return, you’re not going to put your money there. Price and lack of availability of oil will eventually lead to a worldwide recession and we’ll get swept up in it.”

New technology, such as that required to develop tar sands and oil shale resources, is especially vulnerable, Bunger said, because there is not an established constituency to fight for it.

“The BLM is responsible for multiple use and highest and best use of the nation’s resources,” Bunger said, but 50 percent of the agency’s budget goes to litigation or avoiding litigation. “To me, that represents a major inefficiency.”

Speculative development, especially on previously undeveloped wilderness land, represents another kind of inefficiency to SUWA.

“I think the biggest question is, is any of this marketable?” Garbett said. “I don’t see how something like this can compete at all with those producers, say, in the Uinta Basin. The high price encourages people to go out into marginal endeavors.”

Copyright Enterprise Business Newspaper Inc. Oct 15, 2007

(c) 2007 Enterprise, The; Salt Lake City. Provided by ProQuest Information and Learning. All rights Reserved.