Chevron Pulling Out of Oil Shale Lease

Posted by rebhan
Feb 28 2012

Chevron Corp. will “divest” their federal oil shale lease in Western Colorado, effectively ending their research into oil shale.

As first reported by Gary Harmon in The Grand Junction Sentinel, Chevron has chosen to invest “people and capital” in other priorities for the company. Chevron was one of four companies that held a total of six oil shale RD&D leases on federal lands in Shale Country.

The company said in a statement that “Chevron has notified the Bureau of Land Management and the Department of Reclamation, Mining and Safety that it intends to divest its oil shale research, development and demonstration lease in the Piceance Basin in Colorado.”

The company had been working on a process that used supercritical heating in the shale zone to release the kerogen from the rock. According to a statement from the company research had been “productive.” As recently as this past October, the company had reported encouraging results from early testing and announced plans to scale up tests at a privately owned site.

Chevron’s 152-acre federal lease may be transferred to another party provided terms and conditions are met.

(Continue reading below the break to see how Chevron’s move relates to federal focus on oil shale, like the Pioneer’s Act and the 2012 OSTS PEIS.)

The move by Chevron to give up their oil shale lease in Western Colorado comes in the midst of increased national attention on oil shale. U.S. Rep. Doug Lambon (R-Colorado) has been pushing the Pioneer’s Act, an act that would open up more lands for federal leasing and lower the interest rates companies would pay. The bill, which has been attached to House Speak John Boehner’s (R-Ohio) $260 billion transportation and infrastructure package, has already passed the Republican controlled House and is being debated in the Democratic controlled Senate.

Chevron’s move also comes while the BLM is proposing new land lease plans for oil shale. The 2012 Oil Shale and Tar Sands Programmatic Environmental Impact Statement (OSTS PEIS) offers four alternatives for an oil shale leasing program. The new PEIS stands to replace the 2008 PEIS, and the BLM’s preferred alternative in the new PEIS would drastically reduce the amount of available federal land for leasing from near 2 million acres to 830,000 acres and only make the land available for RD&D leases, not commercial.

Colorado energy expert Randy Udall, who runs the Community Office for Resource Efficiency (CORE) out of Aspen, Colorado said that, “Chevron’s research hardly got started and they quickly concluded that they were throwing money down a rabbit hole. It’s indicative of the fact that oil and gas companies see much more profitable, and realistic, opportunities elsewhere.”

The company’s announcement seems to reinforce this claim. “While our research was productive, this change assures that critical resources–people and capital–will be available to the company for other priorities and projects in North American and around the globe.”

There are, however, still companies (and politicians) interested in oil shale and only time will tell if their research will be more productive than Chevron’s and make oil shale a viable fuel source.

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