Tuesday, May 29, 2012

Company raises $11 million for Utah tar sands project

SALT LAKE CITY (AP) — A tiny Canadian company announced Thursday it had raised enough money to start producing oil from Utah’s tar sands for a first-of-its kind project in the U.S.
U.S. Oil Sands Inc. said it raised $11 million from a stock offering and will get started this summer on plans to dig a 62-acre pit in an area of eastern Utah that contains gooey bitumen, a tar-like form of petroleum.

Executives said they will produce 2,000 barrels of oil a day by next year, in the start of what could grow into a much larger operation. The Calgary, Alberta-based company holds leases on 32,000 acres of state trust lands in Utah’s Uinta basin.

“We’re going to build this project ourselves,” Cameron Todd, the chief executive of U.S. Oil Sands, said. “We may take on a partner, but the technology is ours.”

The company says a citrus-based solvent will leave the oil-soaked sands as clean as beach sand, though environmental groups dispute that. Moab-based Living Rivers is trying to stop the pilot project by challenging mining and water discharge approvals from regulators.
in administrative hearings.

But will the project pencil out? Todd said his company will earn at least $30 a barrel after processing and a 200-mile truck delivery to refineries in Salt Lake City or Wyoming, for a potential profit of about $21 million a year for 700,000 barrels of heavy crude.
The 62-acre pit, as deep as 150 feet, could yield 4 million barrels of crude over about six years, he said.

“There’s a lot of risk — prices for oil could be worse and costs more, but those figures are very robust economics,” he said.

Living Rivers argues tar sands mining will leave behind solvents and petrochemicals in unlined waste pits and that snowmelt and rain will wash the toxins into the ground and spread pollution.
Todd said the company will recover all but 4 percent of the bitumen from the sands, and leave behind only 1 percent of the solvent.  Trib.com