Tapping the Riches of Shale

Venturesome companies bet big on "the rock that burns

Once again the turmoil in Iran emphasizes American dependence upon what Jimmy Carter calls the "thin line of oil tankers stretching halfway around the earth to one of the most unstable regions in the world." The drive to gain some freedom from OPEC by developing domestic energy sources has never been more pressing. Last week the Senate easily adopted by a vote of 65 to 19 a $20 billion synthetic-fuel program that, among other things, would turn the nation's vast coal deposits into oil and gas. But of all the old and new sources of petroleum now being freshly examined, none is more promising or as controversial as the oil-bearing rock known as shale.

Venturesome companies are betting millions on shale as they plunge deep into development projects that could soon foster a new energy industry. TIME Los Angeles Bureau Chief William Rademaekers reports from the heart of the U.S. shale country:

The dirt road running up Parachute Creek in western Colorado winds through an ever steeper canyon. As the road climbs, it deteriorates into first a stream bed and then a cliff-hugging path that passes a blackened ledge of shale rock that was struck by lightning two years ago and spouted flames for three days. The Indians once dubbed the magic mineral "the rock that burns."

Finally, at an altitude of 8,200 ft., the track breaks through onto a rolling plateau of sagebrush, juniper and pine. It is here, on this remote plateau, southwest of Rifle, Colo., that Caterpillars of the Colony Development Operation have already cut 300 yds. into a mountain of shale. Near by, in another canyon, Union Oil engineers monitor a conveyor belt delivering a stream of shale into a giant funnel. Some 40 miles south, at Logan's Wash, Occidental Petroleum miners have cut two mine faces into the sides of a shale mountain. Farther northwest lies another tract of shale land soon to be developed by Gulf Oil and Standard of Indiana.

This is the Piceance Basin, the heart of a geological formation containing the world's biggest known deposit of oil shale. Locked in the mottled rock is the energy equivalent of about 1.2 trillion bbl. of oil, or roughly 40 times the nation's present proven reserves of liquid petroleum.

Actually, "shale oil" is neither shale nor oil. The rock is marl, a variety of limestone laced with a solid fossil fuel called kerogen. The kerogen was deposited 40 million years ago in the form of millions of tons of vegetable matter that collected on the bottom of a mammoth freshwater lake that then covered Utah, Wyoming and Colorado. But these lake-bed accumulations were never subjected to temperatures as high as 300DEG F and to extreme pressures that in time created underground deposits of readily usable liquid oil and natural gas. Now man must finish nature's work.

For years shale oil remained undeveloped because conventional petroleum always hovered about $2 below the projected price of shale. Capital development costs have inflated almost as fast as OPEC prices. In the 1960s, when crude was selling for $2 a bbl., estimates were that oil from rock could be produced for $4 a bbl. Now, with world prices going up almost daily beyond the $23.50 OPEC level, shale oil may be produced for $30. But spurred by the ever higher price of crude, a group of energy entrepreneurs aim toward turning out more than 200,000 bbl. of shale oil a day by 1990. This surpasses the average amount of crude oil imported so far this year from Iran.

Shale drillers know where to find their fuel, but they differ on the best way to get it out. Essentially, shale rock must be "cooked" at 900DEG F so that the kerogen can be vaporized and extracted. Two processes have been developed to do this.

One is an above-ground method in which the shale is "distilled" in somewhat the same way that moonshiners extract alcohol from corn mash. After the shale is mined, the rock is crushed. Union Oil then moves shale chunks through a towering surface retort, where hot gases heat it to release the kerogen. Colony uses a different process: it cooks finely ground shale in giant drums by mixing the marl with superheated, marble-size ceramic balls that distribute the temperature evenly and vaporize the kerogen. The balls are then separated from the spent shale by a screen, reheated and used again.

A second, more radical method involves cooking the shale underground. Occidental, which has pioneered this process, plans to dig at least 2,000 chambers connected by tunnels under a 5,000-acre shale tract leased from the Government. The chambers, each about the size of a football field and 250 ft. to 300 ft. high, are created by drilling parallel tunnels leading from a vertical mineshaft into the rock at two different depths. The shale in between is then reduced to rubble by explosions in both the top and bottom. Each chamber is sealed, and pilot-light burners are lowered to start cooking the rock. Kerogen released from the shale settles to the bottom of the chamber and is piped out. Occidental engineers have already "fired" six giant chambers at an experimental facility at Logan's Wash--with mixed results. In an experiment last July, the roof of the chamber collapsed. In others, the yield of shale oil was not as high as expected.

Whatever extraction method is used, the investment will be enormous. Union's proposed 9,000-bbl.-a-day plant would cost $130 million; Occidental's 50,000-bbl.-a-day operation carries a $1 billion price tag. Colony's process, because of its size and capital investment, would be the most expensive: $1.5 billion to $2 billion for 50,000 bbl. of oil a day.

The Government stands ready to help because shale oil is an important part of Jimmy Carter's energy program. The Administration is more optimistic than oilmen: it envisages the production of 400,000 bbl. a day by 1990. Carter wants Congress to grant shale developers a tax credit of $3 a bbl. to make shale oil prices competitive with those of conventional petroleum. In addition to the Senate's $20 billion program, the Administration is providing $2.2 billion in fiscal 1980, largely for shale.

But if the energy companies and Washington policymakers are sold on shale, others are not. Colorado Governor Richard Lamm protests that any crash development program "could do irreparable damage to our water supply, to our communities, to our environment." State officials, local representatives of the Environmental Protection Agency, the Sierra Club and similar groups are allied to stop or at least to stall shale development. Water, a precious resource in the tri-state region, is one of their greatest concerns. Conservationists claim that shale extraction could use from one to five barrels of water for each barrel of oil, but company officials maintain much less would be required. Critics also argue that the underground marl-cooking process could release salts, and perhaps even arsenic, into the region's ground water. Shale opponents protest finally that the surface-retorting process leaves piles of rubble and dust behind that would ruin the pristine Rocky Mountain valleys. A 400,000-bbl.-a-day industry would require 500,000 tons of shale to be mined, retorted and in some cases relocated.

Nonetheless, opponents are willing to permit small test projects of the new energy so that the impact of unknown technologies can be fully measured. Says Terry Thoem, a director of the Denver EPA: "We have been studying shale for years, and now we would like to see some further development on a limited scale to get further data on a shale industry's impact--on water tables, on soil, on just about everything."

The energy companies insist they can respond to the environmental concerns.

They claim that their water requirements would be reasonable. Company officials also say that the underground cooking process seals the chambers, actually fuses the rock, and prevents salts from leaching into ground water. Firms plan to contour the piles of leftover shale rubble and to plant them with local wild flowers and grasses; tests have shown good results.

And most of the industry agrees that the first production units should be small test sites rather than giant plants.

Although the first shale patent was granted in England in 1694 and called for distilling "oyle from a kind of stone," oil from the dark, veined rock so far has not been developed primarily because conventional petroleum has always been cheaper. Now, at last, economic necessity and innovative technology may lead to tapping the vast potential of shale.

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