Coyote Gulch

Monday, December 15, 2008

Colorado Senator Ken Salazar to lead Interior

Jeralyn Merritt at Talkleft says that local news has announced that U.S. Senator Ken Salazar has accepted President-elect Obama's offer to lead the Department of Interior.

Congratulations senator. Water touches everything and water is in the mix in energy, growth, industry, agriculture, conservation and the environment.

Here's a report from Christopher N. Osher and Joey Bunch writing in the Denver Post from earilier in the day, before the news broke. From the article:

U.S. Sen. Ken Salazar is a leading contender to become President-elect Barack Obama's Interior secretary, two sources have confirmed. Reuters News Service used even stronger language in a report Sunday, saying Salazar had become the top candidate for the job...

A source close to Obama's transition team told The Denver Post late last week that Salazar was under consideration for the Cabinet position...

A second source close to the process also confirmed Sunday that Salazar was a leading contender.

Here's some background from Jim Tankersley writing for The Swamp. He highlight the senator's water chops. From the article:

Salazar's family helped settle what is now New Mexico in the 1500s. He was raised on a ranch in the San Luis Valley of Southern Colorado and grew up to become an attorney with expertise in water law. He led Colorado's Department of Natural Resources and was state attorney general before winning a vacant Senate seat in 2004 and entering Congress in the same freshman class as Obama, the former junior senator from Illinois.

Coyote Gulch approves of the choice.

Update From the Associated Press via the New York Times: "A transition official for President-elect Barack Obama says Colorado Sen. Ken Salazar will be named Interior Secretary later this week.

"The appointment will round out Obama's environment and energy team. He unveiled most of the team on Monday. The official spoke on the condition of anonymity to avoid pre-empting Obama's upcoming announcement.

"Salazar is a first-term Colorado Senator who has established a name for himself on public lands and energy resources issues."

More Coyote Gulch coverage here and here.
"colorado water"
6:18:34 PM

Oil Shale: No commercial technology and no market

The economy and the drop in the price for a barrel of oil have dampened the enthusiasm for oil shale (again). Depending on your point of view that may be a good thing or a bad thing. Here's a report from Monica Heger writing for the IEEE: Spectrum. From the article:

The huge run-up in oil prices over the last several years, reaching a peak of close to US $150 per barrel this past summer, has given energy companies a big incentive to find new ways of harvesting unconventional oil, especially in North America. Technology firms targeted oil from tar sands in Canada and from shale, a sedimentary rock abundant in the western United States. But in the fourth quarter of 2008, oil prices plummeted, and that could put the brakes on the development of new extraction technologies, say experts.

"It's a difficult time to come out with a new technology," says Jim Sledzik, an investment manager at Energy Ventures, a venture capital firm in Stavanger, Norway, that invests in oil and gas technology companies. He estimates that oil prices have to be above about $65 a barrel for heavy oil extraction--whether from oil sands or oil shale--to be viable. Sledzik predicts that fewer high-risk projects will receive funding.

According to a 2004 U.S. Department of Energy report, the United States is home to 2 trillion barrels of the world's estimated 2.6 trillion barrels of shale oil. Almost all of the U.S. shale is found in the Green River Basin in Colorado, Utah, and Wyoming.

These reserves have not been tapped, because getting oil from shale has been too costly, energy intensive, and dirty. Recovering shale oil also has the potential to contaminate ground water and produce toxic waste. Estonia, a country dependent on shale for energy, first mines the rock, then, without extracting the oil, burns it to run a generator [see "New Tech, Old Fuel" IEEE Spectrum, February 2007 But burning the shale produces polluting ash, carbon dioxide, nitrogen oxides, airborne particulates containing heavy metals, and sulfur dioxide, which causes acid rain.

Newer technologies seek to mitigate these impacts by pumping the oil out of the ground without mining the shale.

Raytheon has developed a technique that uses radiofrequency energy to extract the oil. Oil producers would lower radio antennas into a well and then heat the shale with radio waves, reducing the oil's viscosity enough to pump it to the surface. According to John Cogliandro, Raytheon senior principal engineer, the technique consumes the equivalent of one barrel of oil for every six produced.

Shell has developed a similar recovery process, except that instead of using RF energy, the company places electric heaters into wells to heat the shale. A technique recently developed by researchers at the University of Alberta, in Canada, improves on it by injecting an iron powder solvent, which in the lab decreased the viscosity of the oil and increased the amount recovered by between 20 and 40 percent.

Technology's impact on the economics of oil shale will go only so far, says Judson Jacobs, research director at Cambridge Energy Research Associates. "Regardless of how it is produced, oil shale [extraction] will be very carbon intensive," he says. If carbon is traded or taxed nationally, that too will be an impediment to oil shale development.

Meanwhile, from the Glenwood Springs Post Independent (Philip Yates):

The Bureau of Land Management's oil shale royalty structure hasn't altered three companies' plans to continue with oil shale research in the Piceance Basin.

When the royalty rates were announced in November, Shell Exploration and Production had said it was hoping for a lower royalty figure "that would be more conducive to get a startup industry off the ground."

Under the BLM's regulations, the royalty rate would be set at 5 percent for the first five years of commercial oil shale production from federal leases. After that, the royalty rate will rise 1 percent each year until it reaches 12.5 percent.

Tracy Boyd, a spokesman for Shell, said nothing has specifically changed with the status or timeline on its oil shale research project in the wake of the Bureau of Land Management's oil shale regulations and the royalty rates. The regulations were released the same day the U.S. Department of the Interior finalized a plan to open 2 million acres in Colorado, Wyoming and Utah to potential oil shale development.

"The one thing it did do for us, that we were looking for all along, was to give us another point of clarity," Boyd said of the royalty rate. "It is not it is all of a sudden that this data point is going to be a make or break kind of thing. It just gives us one more thing to plug into (our economic) model and know that we are going to have to deal with as time goes on."

Boyd added that the company does not "speed up and slow down" its oil shale research development based on the short-term fluctuations on the price of oil, which has been plunging to lows not seen for years...

Kristi Pollard, a spokeswoman for Chevron, said the royalty rates hasn't changed its plans for its experimental lease in the Piceance Basin. "At this point, the 5 percent (royalty rate), we agree with," said Pollard, adding the company is currently evaluating the royalty rate increase after five years of commercial development. "There are plenty of issues that play with these leases and that is certainly not changing our direction whatsoever," she said. Pollard said that Chevron has been very outspoken that if the company goes forward commercially with oil shale development, it wants to do so only if it's environmentally friendly, and if it is economically sustainable. "If we can't do both of those things, then that is what makes us change our mind on its development," she said.

Claude Pupkin, president of American Shale Oil (AMSO), said the BLM's recently released oil shale royalty rates will not have any short-term affects on its current oil shale research program. Pupkin said he felt the rates outlined by the BLM are too high and that it should be capped at 5 percent, instead of eventually sliding up to 12.5 percent. That's because the cost of developing and extracting oil shale is higher than developing conventional oil, he said. Last November, AMSO, a subsidiary of IDT Corp., reached an agreement with Schlumberger Technology Corp. to supply drilled core samples from its research and development lease. Schlumberger will analyze the samples to develop improved methods to estimate rock properties in AMSO's lease, according to IDT. This month, AMSO also reached an agreement with the Lawrence Livermore National Laboratory to study how to permanently store carbon dioxide created by the oil shale extraction process.

More Coyote Gulch coverage here.
"cc"
6:39:26 AM