Shell Oil pulls all three R&D leases in Rio Blanco County

RBC I In a surprise move, Shell Oil announced last week that it will be shutting down its research and development in the upper Piceance Basin area of Rio Blanco County, southeast of Rangely.
Shell now joins Chevron, which also received a research and development lease from the Bureau of Land Management in Rio Blanco County and which decided in 2012 to divest itself of that lease, in wanting instead to focus on other interests.
Shell has been the largest player in the oil shale business in Colorado, beginning its work in Colorado’s Piceance Basin in 1996 and holding three federal research and development as well as demonstration leases.
Shell spokeswoman Carolyn Tucker told the Grand Junction Daily Sentinel that the decision reflects an ever-changing energy market since Shell opened oil shale research in 1981.
“We plan to exit our Colorado oil shale research in order to focus on other opportunities and producing assets in our broad global portfolio,” she told the Sentinel. “Our current focus is to work with staff and contractors as we safely and methodically stop research activities at the site.”
Rio Blanco County Commission Chairman Shawn Bolton told the Herald Times, “Shell has been a good neighbor to everyone in this county. The oil shale process is still in the experimental stage, and I was told by Tucker that Shell went through its entire portfolio and the Piceance Basin facility just didn’t cut it.
“(Tucker) said there are still about two years of shutting down and reclamation to do, then they are likely going to mothball the facility,” he said. “She told me that there is no plan to sell the facility and all I can say is that I would love to see them come back at some time.”
Bolton said he has no idea at this point what Shell’s closure will mean to the county’s coffers or employment picture.
“I imagine we will lose some workforce, and that will hurt, obviously, depending on the number of employees who live here,” he said. “If they keep the facilities for a while at least, they will be paying property taxes on what does remain out there, so that long- and short-term picture is still a mystery.”
Tucker said that employment at Shell’s research site ranges from 10 to 50 workers, depending on the activity at any given time. She said there will be no abrupt departure from the site and that Shell still has obligations and projects it needs to wind down, including reclamation and decommission work required by the Bureau of Land Management.
In August, Shell announced its plans to sell its oil and gas project in Routt and Moffat counties. That, company officials said at the time, followed a decline in earnings and a review of the company’s oil and gas projects in the Americas, followed by a decision to keep those with the most potential for expansion.
Tucker reportedly said at the time that the decision had no bearing on its oil shale project in Rio Blanco County, calling it a separate entity still in the research state.
But, she told the Sentinel, this newest decision results from another review, looking specifically at Shell’s oil shale assets, which also include holdings in Jordan and Canada.
“A number of factors went into the decision,” she said. “Based on those many factors, we’ve chosen to put those resources into other oil shale assets and not in Colorado.”
In addition to the three Piceance Basin leases of 160 acres each, Tucker said Shell also owns about 50,000 acres in and around the Piceance Basin that were originally acquired for oil shale and other reasons.
“We’ve been a landowner in the area for more than 50 years, so we are not going to be making any decisions in the short term on any of those aspects either,” she said.
Rangely Town Manager Peter Brixious told the Herald Times, “I am very disappointed to hear the news although I understand the decision. I also have a feeling that the State of Colorado was not as friendly to Shell as Shell would have liked.
“Shell has been a tremendous partner to Rangely, evidenced by their giving $140,000 last year for new fire trucks for the community,” he said. “They will be badly missed and we can only hope that they will return in the future.”
Brixius said he believes that the majority of workers at the research and development facilities reside in the Rifle area, however, he said, “I am sure we have a couple of employees living here, and it hurts even when only one or two persons are forced to leave a town like Rangely.”