http://business.financialpost.com/news/energy/utah-set-to-be-home-of-first-oilsands-mine-project-in-us-by-end-of-2015
July 21, 2015 6:12 PM ET
CALGARY – Despite fierce opposition from American environmental groups, the first commercial oilsands mine in the United States is just months away from starting up after receiving final regulatory approvals from officials in Utah late last week.
“We’ll be in production later in the fall with commercial production before the end of the year,” U.S. Oil Sands Inc. chief executive Cameron Todd said in a phone interview Tuesday.
Calgary-based U.S. Oil Sands is working through the summer to complete a 2,000-barrel-per-day oilsands mine in eastern Utah, which would make it the first commercial oilsands mine in the United States when it begins producing later this year.
Todd noted that oilsands deposits have been used in the U.S. in the past, including in the construction of the first roads in Utah, but have never been mined on a commercial scale. The Uinta basin in the northeastern and central southeastern of the state has more than 50 identified oil sands deposits, with an estimated total of 20 to 32 billion barrels of oil in place.
Late on Friday afternoon, the Utah Department of Natural Resources’ Division of Oil, Gas and Mining announced approvals for an amendment to US Oil Sands’ mine, which is currently under construction about 200 miles southeast of Salt Lake City.
The decision, released after a public hearing on the mine, requires U.S. Oil Sands to conduct water monitoring and submit a monitoring plan for the project by Nov. 1, and the company has indicated that it will comply with those regulations.
Officials from the Utah division of oil, gas and mining did not respond to a request for comment on Tuesday.
“We’ve seen a number of ways to improve the original design,” Todd said. He added that the amendment would increase the size of the project area but “greatly reduce the amount of tailings that would need to be deposited.”
For instance, the company will be using a mining method called “concurrent reclamation,” where the sand from the mine is being replaced at close to the same rate as the oilsands ore from the mine pits are being extracted.
The company is also using a solvent derived from citrus in oranges to extract the oil from the oilsands ore, which Todd said, helps eliminate the need for large tailings ponds like those in northern Alberta.
The company’s plans in Utah were fiercely opposed by what Todd called “anti-development activists,” which participated in public hearings in Utah on the project’s impact, but he said he was confident the company could successfully operate an oilsands mine with minimal tailings.
“The Division of Oil Gas and Mining’s requiring U.S. Oil Sands to devise a ground-water monitoring program and comply with air quality regulations before the PR Spring tar sands mine undergoes a four-fold expansion is a victory for public health and conservation advocates,” Rob Dubuc, staff attorney with environmental group Western Resource Advocates said in a statement.
If it’s successful, the company may seek to monetize its technology through licensing agreements with oilsands mine operators around Fort McMurray, he said.
Despite the citrus-assisted extraction method, U.S. Oil Sands’ mine is being built at roughly a third of the capital cost of larger oilsands mines in northern Alberta, where new capacity is added for about $100,000 per barrel.
At a cost of $60 million, the capital cost of the mine in Utah will be roughly $30,000 per barrel of new capacity and will likely operate at a cost under $30 per barrel.
Once U.S. Oil Sands proves that the company’s extraction method can work, Todd said the company could increase the size of the mine by 10,000 bpd and potentially build other oilsands mines on bitumen deposits in the States and around the world.
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