Sept/Oct 2010

Canadian entrepreneur looks to Utah oil sands

Possible hurdles include gaining acceptance for a new technology, funding and regulatory approval

By Peter Diekmeyer

Utah oil sands 

The Utah oil sands deposits are less concentrated, but sweeter than those in the Athabasca region, according to Earth Energy's Glen Snarr | Photo courtesy of Earth Energy Resources

Alberta’s massive oil sands have attracted a multitude of energy sector players interested in developing them or in supplying businesses that do. So, at first glance, it is no surprise that Earth Energy Resources would choose to set up shop there. What is interesting, however, is that according to its president, Glen Snarr, the company’s first major development may be in Utah.

“Utah has excellent oil sands resources,” said Snarr. “However, most of these cannot be economically extracted using conventional methods. The new technologies, processes and workflow methods we are proposing would make them so.”

Earth Energy Resources currently holds a 100 per cent interest in 3,170 hectares under lease from the State of Utah School and Institutional Trust Lands Administration (SITLA) in the PR Spring deposit. Snarr estimates that these include 250 million barrels of recoverable high-quality bitumen. The company estimates that getting production going would take between 18 and 24 months, after funding (totalling $35 million) is obtained.

While Utah is hardly known as an energy powerhouse, according to Snarr, the state contains more than half of America’s known oil sands. However, the profile of the Utah reserves is different than the Athabasca oil sands. “The Utah oil sands are relatively disaggregated and spread out over a relatively wide area,” said Snarr. “Although bitumen quality is very similar to that found in Athabasca, it has a much lower sulphur content, which means that it is a ‘sweeter’ oil that provides a more favourable feedstock for refineries.”

To deal with the challenges of bringing Utah’s resources to market, Earth Energy Resources proposes using what it calls the Ophus Process, which differs from the Clark Process used in conventional Athabasca oil sands extraction. The proposed workflow involves establishing a series of small 2,000 barrel per day production facilities that can be easily set up, and moved as the resources in one particular area are recovered. Production could be expanded as needed by the addition of more facilities, which would scale up the overall extraction capacity.

“Digging up the ore and hauling it away in 400-ton trucks like they do in Alberta just won’t work,” said Snarr. “We need a more resource-focused methodology.”

To extract the sweeter Utah bitumen, Earth Energy Resources proposes using an environmentally friendly citrus-based extraction chemical to replace the substantial mechanical energy and caustic soda mixture used in the Clark Process. This new process sharply reduces the quantity of middlings produced in the process, and thus eliminates the need for tailings ponds.

“The result is a more compact overall footprint, which means reduced environmental impacts and a process that is both energy and water efficient,” said Snarr.

That said, despite the promising Utah resources and new extraction technology, raising funds to finance the venture has not been easy. Private equity money has been tight since the global financial meltdown, and the idea of investing in innovation, with its associated increased business risk, does not sit well with some right now.

However, Snarr remains optimistic. “Sure, there are hurdles, but we are a bit ahead of our time: sort of like where Athabasca was 40 years ago, when people were scratching their heads wondering if it would work,” said Snarr. “We are profitable at $50 per barrel oil. With the high oil prices we have seen lately, we will definitely get this off the ground.”

After that, if all goes well, Snarr hopes to partner with a company that is interested in using the Ophus technology to do resource development in Athabasca itself, where he is convinced it can also be applied.

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