Shell Oil's Pursuit of Local Waters Could Have Big Impacts

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Steamboat Pilot & Today (Colorado)

Shell Oil's Pursuit of Local Waters Could Have Big Impacts

by
Tom Ross

Shell Frontier Oil and Gas has filed in Steamboat Springs water court to skim 375 cubic feet per second from this section of the Yampa River, west of Maybell in Moffat County’s Sunbeam area. Shell’s filing could dramatically change the landscape of future water rights and use in Northwest Colorado. (Photo by Hans Hallgren)

Steamboat Springs - When Shell Oil
revealed last week it had filed for substantial water rights in the
Yampa River west of Craig, the news marked another milestone on the
road to fulfilling a prophecy made 2 1/2 years ago:

Powerful interests are coming after the water that originates from melting snow in the mountains of Northwest Colorado.

That was the message that Russell George, then executive director of
the Colorado Department of Natural Resources, brought to a water
symposium at Hayden High School on June 1, 2006.

George, a former state legislator from Rifle, said it was inevitable
that unappropriated water in the Yampa would be called upon to balance
the entire state's needs and obligations. The announcement by Shell
this week underscores the likelihood that the Yampa also will be called
upon to help meet the nation's needs for energy.

Shell's interest in the Yampa stems from the need to amass enough water rights to support

a future oil shale industry. It's a process the company has been
engaged in for decades, according to company spokesman Tracy Boyd.
Shell's water rights, if granted, are initially likely to be
conditional - any decision to develop a reservoir on a tributary of the
Yampa, for example, is at least a decade away. And the day when water
would actually be pumped out of the river is several more years further
out.

However, Routt County Co­mmissioner Doug Monger said if Shell
succeeds in obtaining the rights, the water picture in Northwest
Colorado will change forever.

"We now have just joined the rest of the world and the rest of the
state in having our river over-appropriated," Monger said. "For us in
the valley, to further develop any water, it makes it that much more
complicated."

Monger is chairman of the Upper Yampa Water Con­servancy District's
board of directors and sits on the Yampa River Basin Roundtable. The
latter is part of a statewide effort to determine how Colorado will
meet its water needs for years to come.

A big gulp

Shell Frontier Oil and Gas filed in water court in Steamboat Springs
in late December to stake its claim to skim 375 cubic feet per second
from the Yampa during high flows fed by snowmelt in the spring and
early summer.

That amount represents a minority of the Yampa's peak spring flows,
which commonly exceed 11,000 cf/s west of Maybell, where the river is
about to reach its confluence with the Green River on its way to
merging with the Colorado River in Utah.

However, Shell officials anticipate that amount of in-stream flow
would be sufficient to fill a 45,000-acre-foot reservoir Shell proposes
to build off the main stem of the Yampa in Cedar Springs Draw.

To put that volume of water in perspective, the Yampa River system
yields about 1.2 million acre-feet annually. Communities in Northwest
Colorado consume just 10 percent of that amount before it flows out of
the state.

So, it's easy to see why Shell Oil would look to the Yampa as it
attempts to stockpile water rights in anticipation of commercial
production of petroleum products that would be cooked out of the
oil-rich shale of the Green River Formation.

But Eric Kuhn, general manager of the Colorado River Water
Conservation District, is worried that Colorado's margin for providing
water to growing communities already is thin.

Kuhn told the Steamboat Pilot & Today in the summer of 2006 that
under the Colorado River Compact, he estimated that as little as
250,000 acre-feet remains to be stored behind new dams. His estimate
took into account another 250,000 acre-feet of water from the larger
Colorado River system already tied up in planned water projects.

Other water experts contend the amount of available water is
greater. Still others think water demands for oil shale development
could gobble it all up - the water needs of energy development haven't
escaped Western Slope water interests.

Concerned about the challenge of meeting statewide water needs, the
state Legislature passed the Colorado Water for the Twenty-first
Century Act in 2003. The result was the Statewide Water Supply
Initiative that created diverse panels of citizens to take a close look
at water in each of the state's major drainages.

One result, in late August 2008, was the release of a preliminary
report about how energy development, from oil shale to the mining of
coal and uranium, would impact Northwest Colorado.

The results of the study led Dan Birch, deputy general man­­ager of
the Colorado River Water Conservation District, to call the oil shale
industry an "800-pound gorilla." Based on estimated oil shale reserves
of 1 trillion barrels of oil, Birch told an audience in Grand Junc­tion
in September 2008 that the industry again could require half as many
barrels of water. That's enough to swallow all of Colorado's remaining
undeveloped water under the Colorado river Compact of 1922, he
estimated.

Energy to make energy

The study finds that oil shale could demand water on several levels.
The first is in the recovery of petroleum products from the rock.

Boyd said his company is studying a process that would use a freeze
wall - essentially freezing ground water in an area surrounding oil
shale deposits to isolate them, and then de-watering the earth inside
that boundary.

Water would be consumed in the process of separating petroleum products as they come out of the ground.

Later, water would be pumped back into the area to replace what had been previously pumped out.

However, large amounts of water would be consumed by new power
plants needed to supply the energy the oil shale process requires. And
additional water would be consumed by the growing legion of energy
workers.

Greg Trainor, who participated in the report on the water needs of
energy development in western Colorado, said it concluded that at full
production, it could take as many as 14 new power plants - the size of
the existing coal-fired plant in Craig - to meet oil shale's demands.

Trainor is the utilities and street system director for the city of Grand Junction.

Oil shale development would require "a huge effort just in terms of
construction of power plants," Trainor said. "Think of the energy that
would go into building the power plants."

Respecting elder rights

Monger said the fact that Shell is seeking water rights in the Yampa
River will have profound implications for water users in the valley. To
begin with, any new water right would be junior to Shell's. The water
likely would remain in the river for 15 years to come, but the date
when it becomes activated would hang over the valley's future.

Shell's filing is based on speculation attached to an unproven
technology for energy extraction, he observed. However, businesses that
need new sources of water, including agriculturalists, will find it
harder to acquire capital because of the difficulty of demonstrating
clear title to water, Monger said.

And the cost of filing for new water rights, previously a relatively
uncomplicated process, is sure to become a more complex legal process
requiring the expenditure of thousands of dollars in fees.

Monger is an irrigator on his own ranch in addition to his role on
water boards. He can see the day coming when other interests seeking
water could pursue the leasing or purchase of historical agricultural
rights.

"That will be the next thing," Monger said. "Because in order to
ensure firm yields and consistent water supplies, you need to be higher
in the seniority rankings."

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