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Shell abandons Colorado water rights bid, placing regional oil shale development on hold

latimes.com

By Associated Press
February 23, 2010 | 2:52 p.m

DENVER (AP) — Shell Oil Co. said Tuesday it is abandoning its quest for water rights from a northwest Colorado river to develop oil shale production, citing delays in the project due to the global economic downturn.

Colorado, Wyoming and Utah are thought to hold 800 billion barrels of recoverable oil in shale. But critics of a federal management plan for developing oil shale on public lands say the process would use too much of the region’s scarce water.

Shell was hoping to obtain water rights from the Yampa River. The company, which is the U.S. unit of Royal Dutch Shell, left open the possibility of pursuing the project in the future.

“The exact scale and timing for development will depend on a number of factors, including progress on our technology development, the outcome of regulatory processes, market conditions, project economics and consultations with key stakeholders,” the company said in a statement.

Shell said the ultimate goal is to create an operation that is economically viable, environmentally responsible and socially sustainable.

The state was notified of Shell’s decision on Tuesday, Colorado Department of Natural Resources spokesman Theo Stein said.

The last attempt to mine Colorado’s oil shale, considered the region’s richest, went bust when oil prices dropped and government subsidies dried up. People still refer to “Black Sunday,” May 2, 1982, when Exxon shut down a $5 billion project near the West Slope town of Parachute, putting 2,200 people out of work.

The Bush administration in 2008 approved a plan to make nearly 2 million acres of public land available for oil shale development and finalized rules for commercial production, bringing protests from environmentalists.

Companies are still testing the best ways to tap the vast reserves, but commercial production is likely at least a decade off.

Copyright 2010 Associated Press. All rights reserved.

LA TIMES ARTICLE

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