Utahs economy is robust in almost every industrywith the notable exception of natural resources and mining. While other private sectors continue to add jobs in Utah, the natural resources industry, hit hard by ultra-low oil prices, has shed 1,100 jobs over the past 12 months, according to Department of Workforce data.
Nowhere is that more evident than the Uinta Basin, where oil producers are scaling back operations. Another casualty in that region are the fledgling oil sands companies that hope to develop commercial-scale oil sands projects in the basin.
In early February, U.S. Oil Sands announced it would reduce the pace of field construction on its oil sand project near the Book Cliffs outside of Vernal. The Calgary-based company began to set up shop in the Beehive State in 2015, acquiring mining rights to a 50-square-mile area that contains up to 180 million barrels of untapped oil just waiting to be extracted. U.S. Oil Sands has spent millions to develop its unique extraction process and install the needed infrastructure.
The company says the build-out of the project is 85 percent complete, but despite the time and money already spent, the rippling impacts of energy prices have forced a pullback. In a project update released in February 2016, the company says two of its contractors have closed their Utah operations due to the buckling natural resource sectoressentially forcing U.S. Oil Sands to halt construction, with the exception of critical path items and areas that will lead to the most efficient restart of full construction operations in the future.
With no end in sight to the global oil glut, its hard to predict when prices will rise enough to make oil sands extraction financially feasible. Other oil sands projects are ongoing in the basin, and companies still believe they have the technology to extract oil from the sands cleanly and efficiently.
No other place in the United States has richer deposits of oil sands than Eastern Utah. Our state, which boasts eight major deposit areas, contains 55 percent of all the oil sands deposits in the United States. Some estimates pin Utahs oil sand potential at 32 billion barrels of oil.
Oil sand extraction could represent a game-changer for Utahs oil industry. Advances in extraction processes could enable Utah to produce a high-quality crude oil from sands that could not be tapped as a reliable fuel source just a few years ago.
MCW Energy CEO Jerry Bailey believes Utahs oil sands are vast and rich enough to yield productive returns for at least 50 years. Indeed, samples test out at 8 to 12 percent oil per ton of sand.
The key to unlocking the states oil sand potential is the development of new extraction methods that dont rely on Utahs precious water resources or leave environmental devastation in their wake. Although many are skeptical such methods are even possible, companies like U.S. Oil Sands say they are perfecting these methods now.
Indeed, U.S. Oil Sands believes it has created a one-of-kind extraction process that can boost profitability while minimizing environmental impact.
Many companies over many decades have spent a lot of time trying to get the oil out, says U.S. Oil Sands CEO Cameron Todd. But he says U.S. Oil Sands has developed an economic way to do just that. Its a process thats expandable and applicable to many of the deposits. Maybe we open the door to a lot of future development.
Extracting oil from oil sands was tried for a short time in Utah in the 1970s and 1980s. The high cost of the traditional Clark water extraction process, coupled with low oil prices, combined to make extraction efforts unprofitable at that time.
Low oil prices are again plaguing the industry, but extraction techniques have improved drastically, according to the companies that are working on demonstration projects. New processes have simplified extraction methods, reduced costs and lessened the environmental impact to the surrounding landscape.
U.S. Oil Sands, for example, has developed an extraction process that uses a citrus-based solvent. It recycles 98 percent of the solvent and 95 percent of the water used in the process, says Todd. And it requires about 50 percent less energy than what is used in a traditional oil sands mining project.
Traditional oil sands extraction methods leave behind a toxic sludge that must be collected in huge tailing ponds. These ponds present a danger to the environmentif they are breached, the contaminated waste water will leak into the surrounding soil.
Toronto-based MCW Energy which has an operation in Uintah County, has developed an extraction method that requires no water. A benign solvent created by MCW Energy is used to separate oil from sand. Oil sands are delivered to the extractor column and pass through the solvent. The extracted oil and solvent mixture is diverted into a second column. Oil is separated from the solvent and taken to refineries and distributors. The solvent is re-circulated back through a new batch of sand.
MCW Energy can extract one barrel of oil per ton of sand with its extraction process without needing to construct tailing ponds. The sand comes out 99 percent free of hydrocarbons. Bailey says the sand passes Environmental Protection Agency tests and can be returned to where it was mined or safely used for other commercial applications.
The key was finding the right item and the right combination of it to literally just wash the oil off the sand, Bailey says. Its like detergent washing grease off a plate. Nothing goes into the air. Nothing goes into the water. Nothing goes out onto the ground.
Extracting oil in this way is also more economical than traditional extraction methods using water. The process puts production costs more in line with oil drilling. Bailey says it costs MCW Energy $30 per barrel to extract oil from the Utah oil sands with the process it created. The cost for traditional oil drilling varies from $10 to $20 per barrel.
Extracting oil from Utahs oil sands unlocks a resource thats been a little gold mine laying there that they havent been able to do anything with, says Bailey. Its like an oil reservoir that didnt get buried.
During its first year of oil extraction on its lease, MCW Energy produced 250 barrels of oil per day. In February, it boosted oil production in its Uintah County facility to 500 barrels per day. It is currently raising money to construct a plant that has a daily production capacity of 5,000 barrels.
Global testing ground
Success in extracting oil from oil sands in Utah could have ramifications in many other places worldwideas soon as oil prices reach stability again. China, for example, has oil sands deposits that test out at as much as 30 percent oil per ton of sand. Other large oil sands reserves can be found in Kazakhstan and Russia.
These countries are showing interest in the processes being used in Utah and could apply those same technologies to the oil sands within their borders. With 100 billion barrels of oil in proven oil sands deposits worldwide, it could equal a promising yield and add a significant amount to oil reserves for a host of countries.
Its going to open the clean extraction of sand all over the world, Bailey says. Everything has got a niche, whether it is solar, thermal or wind. They all play a little role. That is what this is going to do. Im not saying its going to go in there and put oil companies out of business. No way. Its just going to be another opportunity.
(c) 2016 Mehr News Agency Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers