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| Wed, 19th Oct 2022 17:02:00 |
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How a Utah utility is helping an Estonian oil company hoard Colorado River water |
$10 for 3.2 billion gallons of water? A loophole in Utah law could enable the country’s first commercial oil mining operation.
Millions of years before dinosaurs went extinct, what is now Utah was submerged by a broad, shallow sea. Over millennia, as the water receded and tectonic plates shifted, rich organic marine material accumulated, forming thick layers of sediment that eventually became the fossil fuel deposits of the Uinta Basin in the northeastern part of the state. The formation is estimated to hold as many as 300 billion barrels of oil — more than the proven oil reserves of Saudi Arabia.
The basin’s immense oil-producing potential remains largely untapped. Drillers in the Uinta Basin extract about 65,000 barrels of oil per day, or just over 1 percent of the more than 5 million barrels daily drilled in the Permian Basin, which straddles West Texas and New Mexico and is the country’s most productive fossil fuel reserve. One of the biggest hurdles is the waxy and viscous quality of Uinta oil, which is so thick that it needs to be constantly heated to keep it liquid. The deposits are also trapped in tiny pores between rocks and more widely dispersed than other shale formations in the country. As a result, oil drillers have been tepid in exploring the basin, despite high gas prices and calls to boost American oil production.
A state-owned company from the tiny Baltic nation of Estonia wants to change that. The company, Enefit American Oil, has proposed strip-mining 28 million tons of rock, heating them up to temperatures around 1,000 degrees Fahrenheit, and extracting a type of synthetic crude oil. Enefit plans to operate on about 7,000 acres of desert land just south of Dinosaur National Monument and produce 50,000 barrels of oil per day, almost doubling the entire basin’s production. Its novel oil extraction method is also reportedly up to 75 percent more carbon-intensive than traditional fossil fuel extraction. No operation of its kind currently exists in the United States.
But Enefit’s grand plans hinge on one crucial resource that’s in short supply all over the American West: water. The operation needs millions of gallons a day to break up the petroleum-carrying rock and extract oil. In 2011, the company purchased a water right for approximately 10,000 acre-feet — or 3.2 billion gallons — of water from the White River, a tributary of the Green River which flows into the beleaguered Colorado River.
Utah and six other Western states are overwhelmingly dependent on the Colorado for their needs, from urban drinking water to agriculture. But a yearslong megadrought fueled by climate change has left the river in dire straits, and states hold more water rights on paper than physically exist in the river. As a result, water users are making painful cuts to prevent the river’s reservoirs from reaching dangerously low levels. Historically, Utah has not used its full allotment from the river and has restricted large new appropriations for decades in order to fulfill its obligations to Native tribes and downstream states.
A complex set of rules govern the ownership and use of water in the Colorado River basin. Key among them is the “use it or lose it” principle, which dictates that a water right once appropriated must be put to “beneficial use” — such as for farming or mining — within a specific amount of time. Utah law requires that this threshold be met within 50 years, which is where Enefit ran into trouble. The water right that the company purchased in 2011 dated back to 1965 — meaning it was due to lapse in 2015. If Enefit didn’t put it to use by then, the water right would return to the state. Given the number or regulatory hurdles it needed to overcome before it could even start drilling, there was no way it would start using its water in time to keep its right.
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