By Steven Oberbeck The Salt Lake Tribune
A small Canadian company, in need of millions for its ambitious plans, also is facing stiff opposition from two Utah environmental groups that are trying to thwart its efforts to build one of the first commercial tar sand mines in the country.
Earth Energy Resources, based in Calgary, Alberta, received approval a year ago from the staff of the Utah Division of Oil, Gas and Mining to begin working a 62-acre deposit on the Uintah County-Grand County line.
But opposition from Moab-based Living Rivers and Peaceful Uprising has thrown that decision to Division Director John Baza, who said Tuesday at an informal hearing he anticipates ruling on the company’s mining permit within the next 30 days.
“Even then, my decision won’t necessarily be final,” Baza said, indicating that anyone who disagrees with his ruling can appeal to the board of the Division of Oil, Gas and Mining.
Earth Energy Resources contends its process is environmentally friendly and uses citrus-based solvent to recover heavy oil, or bitumen, from tar sands.
“We can extract the bitumen in a far more responsible manner than has been done to date anywhere in the world,” said Barclay Cuthbert, Earth Energy’s vice president of operations. “We are eager to get this project under way.”
Environmentalists such as John Weisheit of Living Rivers aren’t convinced.
Weisheit noted that recovering bitumen from tar sands will require vast water resources and that Earth Energy’s project could be just the beginning of a wave of such development. That could have far-reaching effects on the environment in Utah and other states, he said.
“This type of project isn’t appropriate for the Colorado Plateau. There is just not enough water to develop those resources.”
Earth Energy is facing what may be a far more formidable obstacle than the outrage of Utah environmentalists.
The company needs to raise $35 million to fund the development of its plant that it projects will turn out 2,000 barrels of oil a day. Included will be $1.7 million it will need to purchase a bond so the state can be comfortable that adequate financing is available to handle the reclamation of the mining property once all the tar sands have been removed.
“It is a challenge,” Cuthbert said, indicating Earth Energy has some financing commitments in place but that many are contingent on the company raising the money that will put it over the $35 million mark.
He estimated that it may be 18 months to two years before Earth Energy’s Utah mine is up and running.
Juliana Williams of Peaceful Uprising questioned whether the threat to the environment was worth a plant and mine that over its seven-year life would produce the equivalent of four hours of the nation’s total energy needs.
“They promise there will be zero emissions and zero discharge, but those promises of safety will mean very little if something happens,” she said.
Four Utah refineries already process upward of 5 million barrels of crude a year that are recovered from tar sands in Canada, a figure that could climb by 13 percent if Earth Energy’s project eventually goes online, she said.
By PAUL FOY Associated Press Writer 07-27-2010 18:57
SALT LAKE CITY (AP) _ An energy startup from Canada on Tuesday defended its plan to launch the first significant U.S. oil sands project in eastern Utah, after opponents argued it would dig up fragile topsoil and pollute groundwater.
The criticism against the Earth Energy Resources Inc. project came during an informal hearing before the head of the Utah Division of Oil, Gas & Mining, who is considering whether to uphold his staff's approval of the company's operating permit.
The Calgary, Alberta-based company insisted it won't pollute anything and will leave Utah's oil sands as clean as beach sand after processing with a citrus-based solvent.
"It will be a good project for Utah," company vice president Barclay Cuthbert testified. "We'll be providing energy that will be used in the state."
The company has obtained government permits to open the first U.S. oil sands surface mine designed for producing bitumen, a tar-like form of petroleum, at a 62-acre pit in eastern Utah. For decades other Utah operators have used oil sands as a poor-man's asphalt, but nobody has tried to produce petroleum from U.S. oil sands on a scale planned by Earth Energy.
The private company with 411 shareholders says it will turn out 2,000 barrels of oil a day after raising $35 million from private equity groups for the plant.
The Division of Oil, Gas & Mining approved a permit a year ago, but the company hasn't posted a reclamation bond needed to obtain the permit.
Division head John Baza held a "protest hearing" Tuesday to take objections from Grand County residents and environmental groups. The groups promised not to file a formal appeal to a state board pending Baza's review.
Opponents said an oil-sands operation that produces so little petroleum isn't worth doing, given the potential damage to public lands. State officials responded that their job was simply to ensure Earth Energy follows environmental rules. The company obtained a lease on Utah's trust lands.
Utah's oil sands will never prove economical, argued Tim DeChristopher, an environmental activist who faces a September trial on felony charges of disrupting the Bush administration's final oil-and-gas auction in Utah.
"This project is a bridge to nowhere," DeChristopher said.
Opponents fear Earth Energy's project is the start of widespread development of Utah's spotty oil-sands reserves, which they say can't be developed responsibly in a semiarid desert.
Earth Energy says it will take 4,000 barrels of water a day to make half as many barrels of bitumen and that it can pump the water from deep underground. Even state regulators questioned whether that much groundwater was available, but said it wasn't their call to make.
The company says it has obtained water rights for the pumping.
John Weisheit, a Colorado River guide and founder of Living Rivers, said the project will be a disaster, and others questioned whether the company could possibly make money on it.
"We're not undertaking this project to go bankrupt," Cuthbert replied. He said the project was profitable with crude prices hovering around $77 a barrel.
Cuthbert added Earth Energy is hoping to "prove our technology" in its first business venture.
Baza said he will decide whether to uphold his staff's approval within a month.
Deseret News Amy Joi O'Donoghue
State officials listen to concerns about proposed tar sands mining project
Published: Tuesday, July 27, 2010 7:34 p.m. MDT
SALT LAKE CITY — Prompted by concerns lodged by environmental groups, the state Division of Oil and Mining held an informal hearing Tuesday to air questions on impacts that could result from a tar sands mining project straddling the borders of Uintah and Grand counties.
Proposed by Canada-based Earth Energy Resources, the operation would take place on 213 acres and involve the open-pit mining of tar sands to extract 2,000 barrels of bitumen per day over a seven-year period.
Although several of the hearing participants questioned the financial viability of the project, even terming it "experimental," Earth Energy Resources Vice President Barclay Cuthbert said the venture would not be pursued if dollars weren't going to follow.
"We're not undertaking this project to go bankrupt," Cuthbert said. "The economics of this project stand on their own."
Timothy DeChristopher, an environmental activist best known for deliberately monkey-wrenching a controversial oil and gas lease auction in December 2008, said he failed to understand why the state would allow the project to move forward given the unknowns.
"I can't understand why the state would allow an unprecedented, experimental project to happen in the Colorado River watershed," DeChristopher said. "This project is a bridge to nowhere."
Groups that include Living Rivers and Peaceful Uprising worry that the operation could contaminate tributaries that feed into the Colorado River and result in dust pollution because of the heavy truck traffic — all for oil that they say generates more greenhouse gas emissions than conventional crude oil.
Aside from those concerns, Living Rivers conservation director John Weisheit said the water taken from an aquifer necessary in the mining process could deplete the aquifer. Weisheit stressed that the value of the Tavaputts Plateau is to "leave it as it is."
"It is inappropriate to do this in the Colorado Plateau," he said. "It cannot go forward."
Carla Knoop, an environmental consultant hired by Earth Energy Resources, said the appropriate controls and safeguards have been implemented in the mining operation's design to catch any runoff in a containment system that includes berms and ditches. The operation, Knoop said, is 25 miles from Willow Creek and 38 miles from the Green River. The area has no "live" water in its vicinity — only an drainage system that has no water in it except during or immediately after a rainstorm, she said.
Tom Munson, a state hydrologist who has reviewed the proposed project, said the company also plans to implement a storm water-containment system, which is "one of the strong things we could ask for."
"We're not dealing with the Colorado River here," Munson said. "I am very certain very little if any runoff will occur."
Division officials said Earth Energy Resources has met the requirements of the permitting process, leading the agency to approve a permit last year, pending receipt of a reclamation surety of nearly $1.7 million.
Division director John Baza will review a transcript of the hearing and the documents associated with the permitting process. Baza indicated he will issue a final decision within 30 days on whether to grant the permit, seek modifications or remand it for additional review.
The environmental groups and the company then have the option to appeal his decision. That matter would be heard by the state Board of Oil, Gas and Mining.