The Federal ones approve to reopen oil shale mien

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The federal government gave its approval Monday for the reopening of an oil-shale mine in Utah, one of the experimental works intended to boost domestic oil production on Western lands.

A top-ranking Interior Department official signed off on the project, and officials said an Alabama-based partnership, Oil Shale Exploration Co., would be offered a lease to work the federal land within days.

The approval from C. Stephen Allred, Interior's assistant secretary for lands and minerals, followed leases the government awarded in December for Colorado projects, where three oil companies plan to produce shale oil by heating layers of rock in the ground.

Utah has the only mining project where oil shale will be brought to the surface, crushed into gravel and fed into a furnace-like retort.

The White River mine near Vernal, 130 miles east of Salt Lake City, was abandoned by three major oil companies in 1985 when falling crude prices made shale oil -- long an elusive bonanza in the West -- uneconomical. Today's crude oil prices could make oil-shale development more practical.

"We're ready to put the lease on the table," James F. Kohler, solid-minerals chief for the U.S. Bureau of Land Management in Utah, said Monday.

Oil Shale Exploration Co., also known as OSEC, still needs to submit operational plans for its phased testing program.

As part of the lease, Kohler said the government would require OSEC to keep piles of spent shale in lined pits until officials can figure out how to dispose of the waste.

The alkaline tailings have some heavy metals and arsenic and could grow to enormous piles, but production will be limited for years before the company starts any large-scale mining.

One possible solution would be to dump the spent shale back into the mine, he said.

The White River mine reaches a relatively thin layer of oil shale 1,000 feet underground. The richest layer is only 58 feet, compared with zones 1,000 feet thick in Colorado that are closer to the surface, where heating the ground is thought to be more practical.

The Interior Department had already determined that projects in Colorado by Shell Frontier Oil and Gas Inc., Chevron USA Inc. and Midland, Texas-based EGL Resources Inc. would have no significant environmental impact.

The government made the same determination Monday for the reopening of the White River mine. The review took longer because officials had to assess the potential of more damaging environmental effects of mining.

Officials got a late start on the review because at first, six companies competed for the right to reopen the White River mine.

OSEC emerged as the winner. It 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.

Dan Elcan, OSEC's managing partner and a Mobile., Ala., commercial real-estate developer, didn't return a message left on his cell phone late Monday by The Associated Press. His partnership is backed by Twin Pines Coal Co. of Alabama and would use Canadian technology.

Environmental groups have shown little resistance to the demonstration projects, but that could change when oil companies seek to mine or heat up larger pieces of federal land, consuming vast amounts of water in an arid region. The oil shale reserves scattered in Colorado, Utah and southwest Wyoming are believed to contain a 100-year domestic supply of oil if it can be unlocked.

Oil shale is said to be "rich" when it contains 30 gallons of petroleum for each ton of rock, but pound for pound that amounts to only 1/10th of the energy of liquid crude oil. Those tough economics have defied efforts at oil shale development for more than a century, most recently in 1982, when Exxon shut down its $5 billion Colony project in western Colorado and laid off 2,200 workers.

"Oil shale has the energy density of a baked potato," said Randy Udall, a skeptic and director of the Aspen, Colo.-based nonprofit Community Office for Resource Efficiency. "If someone told you there were a trillion tons of tater tots buried 1,000 feet deep, would you rush to dig them up?"

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