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Nation's First Tar Sands Mine Stirs Water, Environmental Fears Out West

A Canadian company opens a test pit in Utah and could be running a sizeable mine by early 2014. But is there enough water to support the industry?

Aug 16, 2012
U.S. Oil Sands, a Canadian company, has leased about 32,000 acres in Utah for ta

MOAB, UTAH—To the ancient Indians who roamed the Colorado Plateau in what is now eastern Utah, the black globs of sticky, smelly bitumen they picked up from the sandy soil mystified them so much they called the strange substance "rocks that burn."

Today, the bitumen that fascinated the Indians for its mysterious quality of combustion is the focal point of a battle over whether bitumen—a thick, tarry substance also known as tar sands oil—should be mined in Utah, which harbors the nation's largest oil sands deposits.

According to the Utah Geological Survey, about 25 billion barrels of bitumen are buried on state and federal land. If every drop of that oil was extracted, it would supply all the nation's current oil needs for a little more than three years.

Utah regulators already have issued permits to an up-start Canadian energy development company that hopes to mine nearly 6,000 acres. The Calgary-based company, U.S. Oil Sands Inc., has scooped open a two-acre test pit in its first step toward full-scale production. If it keeps to its timetable, the nation's first sizeable oil sands mine will be operating in this largely unspoiled wilderness by early 2014.

But even as U.S. Oil Sands is finalizing its plans and calling its operation "shovel ready," two environmental organizations have stepped up their efforts to keep oil sands mining out of Utah. They say that ripping open the land for bitumen is an imprudent and desperate attempt to slake the national thirst for oil—and that it threatens what little water there is in a vast yet delicate ecosystem. According to a letter written by the Utah Division of Oil, Gas and Mining, "It is expected that the mine will use 116 gallons of water per minute on a 24-hour basis."

"This is the time and place to stop it, stop the needless assault on our wilderness," said John Weisheit, a river guide who for the last decade has been the conservation director of Living Rivers, a Moab-based environmental organization.


Click here to view a slideshow of the U.S. Oil Sands test pit in eastern Utah


Living Rivers has joined with Western Resource Advocates, a nonprofit environmental law and policy organization, to appeal U.S. Oil Sands' mining permit. An administrative law judge in Salt Lake City is expected to rule soon on their argument that state regulators ignored threats to ground water when they granted the permit.

In a preface to a 2010 report on tar sands and oil shale, Western Resource Advocates President Karin P. Sheldon said oil sands mining offers too little energy in exchange for the water consumption and environmental destruction and expense it requires. According to the U.S. Energy Information Administration, at least 4,000 pounds of earth will be dug up for every 20 gallons of gasoline made from oil sands.

U.S. Oil Sands estimates that as much as two barrels of water will be used for each of the 2,000 barrels of bitumen it expects to produce each day. (Converted into gallons, that means the company needs as much as 168,000 gallons of water to produce 84,000 gallons of bitumen.) Company officials say 85 percent of the water will be recycled, with the remainder lost to evaporation or returned to the pit as moisture in the leftover sand.

Weisheit points to damage done in Alberta, Canada, where oil sands have been mined for almost half a century, as an example of why this type of mining shouldn't be allowed in Utah. Gigantic strip-mining operations have destroyed large tracts of Alberta's forests, and the province is struggling with groundwater contamination and toxic wastewater that harms human health and kills wildlife.

But Alberta's booming tar sands industry also has given Canada a robust and growing source of jobs and revenue—and it is the lure of similar riches that has prompted Utah to open its arms to petroleum development companies. Already Utah has granted oil sands land leases to seven businesses, including one that since 2007 has operated a small mine that produces bitumen for local asphalt needs.

Regulatory oversight on state land is less stringent than on federal land in Utah and the political atmosphere is so supportive that in a January letter to the governor, U.S. Oil Sands executive Cameron Todd praised Utah as a "can do state" for petroleum production. He also urged the governor to quickly dispatch the "obstructionist" groups opposing his project.

Utah has even shied away from drawing up a master plan for developing the state's oil sands.

"What we need to assume is business knows their business better than the state," said Jeff Barrett, infrastructure and incentives manager for Utah's Office of Energy Development, which deals with economic matters. "Our role is to stay out of their business."

In an interview with InsideClimate News, Todd said the company is committed to proving Utah oil sands can be both economically viable and a new source of domestic energy—and that it can achieve those goals without leaving behind the environmental devastation seen in Canada.

It will do that, he said, by relying on technology it has developed that uses a citrus-based solvent instead of the toxic chemicals used in Canada. He also promised there will be no toxic waste ponds and the company will restore the land to its native condition.

"This is one of the most environmentally responsible projects undertaken in oil sands development," Todd said. "It will use less water and less energy and has one of the smallest greenhouse gas footprints of any oil sands project."

The process is so revolutionary, Todd said, that he foresees U.S. Oil Sands eventually taking the company global, reaching as far as Africa, Russia and South America.

U.S. Oil Sands' first mine is located at a site called PR Spring, about a mile above a valley where water from an underground spring provides a year around flow of water for hikers and campers on the parched plateau. The test pit lays bare grey rocks that ooze a sticky, black substance and clumps of gray sand that look like kitty litter globbed together with used motor oil. A faint petroleum odor cloaks the pit like the persistent smell of a Jiffy Lube waiting room.

The initial 213-acre mine will be a small operation, about the size of Dodger Stadium in Los Angeles. But beyond its borders lie hundreds of thousands of acres of Utah oil sands deposits, ready to be mined if this first effort proves economically feasible.

Utah is Nation's Second Driest State

At the core of the debate over oil sands mining is Utah's water—or lack of water. The oil sands region gets only 10 to 12 inches of rain a year and Utah is the second driest state in the nation, behind only Nevada.

Living Rivers and Western Resource Advocates believe oil sands mining will threaten what little water there is on the semi-arid plateau and that solvents and petrochemicals in unlined waste pits will soak into the ground and ultimately aquifers when it rains and winter snow melts.

Todd said the water his company needs will come from aquifers deep beneath the earth, where the water is so stagnant and heavy with salts that it could never be used for drinking or agriculture. He said those deep aquifers are protected by rocks as thick as one-third of a mile and as solid as concrete.

What's left over from the extraction process and returned to the pits will be little more than damp sand with minute traces of oil and solvent that pose no danger, he said.

Todd also said the Colorado plateau has little or no surface water to pollute, a position supported by Utah regulators. Consequently, the state didn't require U.S. Oil Sands to obtain a water pollution permit or do any water monitoring.

"We maintain the ground water is very, very deep, and access by pollutants to that ground water was minimal," said Walt Baker, director of the Utah Division of Water Quality.

According to the U.S. Geological Survey, however, there hasn't been a significant study examining available water resources on the Colorado Plateau in at least 30 years, making it difficult to determine whether the plateau has enough water to sustain bitumen refining as well as the region's delicate ecology.

"One of the big concerns is where is the water coming from to support the mining and what will no longer be supported because that water is gone," said David Susong, the U.S. Geological Survey's supervising hydrologist in Utah.

Susong said the most contemporary and authoritative voice on water impacts from oil sands mining is a 2010 Government Accountability Office report that examined oil shale mining in Utah, Colorado and Wyoming. It was prepared in response to questions surrounding the need for water in oil shale production, which like bitumen production uses water-intensive techniques. But Susong said the GAO's findings are equally relevant to oil sands mining.

According to the report, enough water is probably available for the initial development of oil shale mining, but the growth of the industry may be limited by water demands from municipal and industrial users, the potential of reduced water supplies from global warming, obligations under interstate water compacts to other users, and the need to provide additional water to protect threatened and endangered fish.

Mining on the plateau "... could have significant impacts on the quality and quantity of water resources" and could harm native plants and animals, the GAO concluded. It also warned that aquifers could be drained to critically low levels. The GAO qualified its concerns by pointing out that the scale of mining is uncertain and knowledge of current water conditions is limited.

U.S. Oil Sands' Todd said the GAO report is too general to be applicable to his operation and that the deep aquifers in the area meet his company's water needs.

"Water is in really short supply near the top 100 feet of the surface but it's not in short supply at 2000 feet. It is plentiful," Todd said.

But records on file with the Utah Division of Water Rights hint U.S. Oil Sands may be struggling to find the deep water. The company drilled three dry wells before finding water somewhere between 2,000 and 2,500 feet in a fourth well, according to Dennis Sorensen, with the Utah Division of Water Rights. In June the company requested a drilling permit for a fifth well.

"I'm not sure they got what they need from that one well," Sorensen said.

Weisheit, with Living Rivers, said it's important to protect the little water that exists on the plateau, where hawks soar and antelope graze on wild Indian rice grass.

"It may not be a lot but look at what depends on it," he said, showing the vista to an InsideClimate news reporter.

At the small, roughhewn campground in PR Spring, built as an Eagle Scout project nearly a decade ago, Weisheit opened a spigot that tapped into the underground spring and let cold, clear water splash though his fingers.

"How can they say 'No water?'" he asked.

Company Uses Citrus-Based Solvent for Mining

The U.S. Oil Sands operation is built around an extraction process that uses d-Limonene (pronounced de-lie-mo-neen) a liquid with a lemon-like smell made of oils pressed from the skins of oranges, lemons, limes and grapefruits. Small quantities of d-Limonene give cookies and candy a fruity taste. It's also used as an industrial solvent in removing asbestos shingles and cleaning concrete.

The U.S. Environmental Protection Agency has run limited tests on d-Limonene and includes the substance on its Generally Recognized as Safe List. But its report on d-Limonene says that determination was based on small quantities used to flavor foods. In large doses, laboratory rats got sick when exposed to the chemical.

Todd said U.S. Oil Sand's technology is proprietary and he declined to discuss d-Limonene or explain how it is used to process oil sands. In documents filed with Utah, the company said it will get its d-Limonene from Florachem Corp., a Jacksonville, Fla. company. A Florachem representative said he couldn't discuss the business relationship.

Florachem's website says d-Limonene presents no long-term effects to the environment and that "related chemicals are known to be biodegradable." At the same time, however, safety information U.S. Oil Sands filed with Utah mining regulators says d-Limonene shouldn't be discharged into surface waters and "may be toxic to aquatic organisms."

John Barnett is CEO of Bio-Concept, a Texas-based company that uses d-Limonene to clean oil-pumping sites. Although Barnett isn't familiar with U.S. Oil's specific process, he said when d-Limonene is mixed with tar sands it creates a chemical reaction that causes the oil to separate from the other material.

Barnett said the issue U.S. Oil Sands faces in using d-Limonene is that demand is high for the product and supplies are sometimes limited. Companies that produce d-Limonene compete with other, giant industries for citrus fruit, including Sunkist, which squeezes it for orange juice, and SC Johnson, which uses it in household cleaners.

"The problem is a limited amount of production in the world," Barnett said. "You are at the mercy of mother nature. If you have some bad growing years you are screwed."

Barnett estimated U.S. Oil Sands probably needs as much as 1,000 gallons of d-Limonene a day to meet its 2,000 barrels-per-day production schedule for bitumen.

U.S. Oil Sands officials said Barnett's estimate is wildly inaccurate, but declined to say how much of the chemical they would need.

Another concern about d-Limonene was raised by William Johnson, a geophysicist and professor at the University of Utah, whose testimony was submitted in the court case on Living Rivers' behalf. He said that during the extraction process d-Limonene can unlock carcinogens that are naturally found in bitumen and that those carcinogens might migrate into groundwater.

Federal vs. State Regulations

Utah's oil sands were formed 45 million years ago when organic deposits of driftwood, leafs, algae and animals settled to the bottom of a giant inland lake and were buried by sand and silt. The land was once part of the federal Office of Naval and Petroleum Oil Shale Reserves, which insured that the military had an emergency supply of oil. Eventually it was turned over to Utah's School and Institutional Trust Lands Administration, which helps fund the state's public schools, in exchange for land set aside for two national parks.

U.S. Oil Sands paid the Trust $3 million for 10-year renewable leases for 32,005 acres. It will also pay five percent in royalties, about $2 million a year.

Compared with Canadian oil sands real estate, the land is cheap. The company estimates it will pay about five cents in lease fees for every barrel of oil, compared to the $1 a barrel companies typically pay for oil sands land in Alberta, Canada.

Although the U.S. Oils Sands operation lies on state land, the vast majority of the Utah oil sands deposits are on land that is still controlled by the federal government, through the Bureau of Land Management.

Under the 2005 Energy Policy Act, the BLM was required to draw up a plan for developing oil sands and oil shale on federal lands. The goal was to reduce the nation's growing dependence on foreign oil.

The agency released its plan in the final months of the Bush administration and announced it would open 431,965 acres to oil sands mining. But the angry response from environmental organizations and the public forced the Obama Administration to reassess the plan.

Four years later, a development plan is still months away from being finalized. In its most recent recommendation, announced earlier this year, the BLM proposed that the amount of federal land open for oil sands development be slashed by nearly 80 percent to 91,045 acres. At this point it hasn't leased any land for oil sands development, although a 2,206-acre lease is under consideration.

The BLM also proposes limiting the initial lease holders to research and development projects, meaning they'd have to demonstrate that full-scale production is economically and commercially practical before moving ahead with full scale development.

The BLM's cautious approach doesn't sit well in Utah, where the state has already leased more than a third of the 141,020 acres of the land it has open to oil sands mining.

County commissioners in rural Uintah County, where the largest percentage of oil sands and oil shale is located, have charged the Obama administration with ignoring Congress' earlier energy mandate, becoming cozy with environmentalists and developing policies "against energy development on Western public lands, according to a resolution signed by commission chairwoman Darlene Burns.

Utah Gov. Gary Herbert blasted the BLM earlier this year for its proposal to drastically reduce the lands available for oil sands and oil shale development.

"With no science and no data, and with a wave of their federal bureaucratic magic wand, they just take the bulk of the acreage off the market, stifle innovation, and demonstrate, yet again, that this administration is patently hostile toward even the possible development of much needed energy resources," Herbert said in a statement displayed on his website.

Utah also has set its environmental bar for mining operations much lower than the BLM.

If U.S. Oils Sands had tried to lease federal land, its application would have triggered a National Environmental Policy Act study, a comprehensive report that assesses a multitude of environmental issues and impacts, including climate change, air and water quality, water availability, wilderness protection and economic impacts.

In Utah, however, mining companies submit their own environmental analysis—"a general narrative description identifying potential surface and/or subsurface impacts," according to the Utah Administrative code that sets regulations for large mining operations. The self-generated report must touch on such issues as air quality, endangered species and impacts to surface and groundwater systems.

Paul Baker, mineral programs manager for the Utah Division of Oil, Gas and Mining, acknowledged that Utah's environmental review is less stringent than the BLM's, but said his staff has enough experience in mining operations and environmental review to evaluate the technical data that applicants supply. (Paul Baker is not related to Walt Baker in the water quality division.)

"We don't go in blindly and just automatically accept what we're told," he said.

The company that U.S. Oil Sands hired to address water issues—JBR Environmental Consultants, Inc.—prepared a 31-page report that U.S. Oil Sands submitted with its permit application. It said there wasn't enough ground water to worry about and "the operation is not expected to generate contaminants in quantities that would present a threat to human health or the environment."

Baker's division found dozens of faults in its initial review of U.S. Oils Sands' plan, including how it proposed to restore the damaged landscape once the mining was complete, a lack of specific answers about existing water sources, vague details about the pits and mining plan, and the potential for runoff from rain and snow to collect in the pits. But all those issues were resolved to the agency's satisfaction, and U.S. Oil Sands was awarded a mining permit in 2010, after a two-year review.

What Happens Next?

The immediate future of the nation's first significant oil sands project now rests with Sandra Allen, a state administrative law judge in Salt Lake City. In May, Allen heard two days of testimony on Living River's contention that state regulators didn't thoroughly consider water implications when they gave U.S. Oil Sands a permit.

Meanwhile, U.S. Oil sands continues preparing for full-scale mining in 2014. Earlier this month it issued a news release saying its search for water is continuing, plans are being finalized for constructing a maintenance facility and administration building, and mapping is underway to identify the most abundant oil sands deposits.

Clarification: This story has been changed to emphasize that Jeff Barrett, infrastructure and incentives manager for Utah's Office of Energy Development, deals with economic issues, not regulatory matters.  

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