Utah Oil Sands - Best Left Un-Mined

May 17, 2016 10:17 AM ETUS Oil Sands Inc. (UERLF)22 Comments
Moshe Ben-Reuven profile picture
Moshe Ben-Reuven
202 Followers

Summary

  • Utah has an estimated 12-19 billion barrels of bitumen underground in the desert. Even strip mining would be expensive and prohibitive.
  • US Oil Sands, Inc. is a Canadian public company that's all set to start operation at PR Spring, producing 2,000 BPD of Bitumen. Not really.
  • USO claims a novel solvent bitumen-recovery technology, reducing capex over 75%, using virtually zero water, a good fit for the Utah desert. Again, not really.

At first blush, one may believe that US Oil Sands, Inc. (OTC:UERLF) is a fresh E&P company, with an exciting new technology, about to start a modest 2,000 BPD open-pit bitumen production in Utah's PR Spring. And that it's a Canadian public company, traded on the TSX Ventures as USO. Also, that USO's disruptive solvent technology can radically reduce capex, as well as use far less water (than in Athabasca, Canada) for open pit mining. A perfect fit for the Utah desert, and its unique brand of water-free oil sands. But looks are misleading. None of the above is true.

The focus of this writing is indeed US Oil Sands, Inc. (which I'll abbreviate here as "USO"). Also, we are using induction to infer the inherent dangers from an estimated 12 to 19 billion barrels of bitumen buried in the Utah desert. The current low petroleum market prohibits oil sands' expensive recovery, even by strip mining. But there may be a day in the future, when crude oil costs rise sufficiently to make this resource attractive.

I strongly believe that by then, we will have a severe water shortage to rival our fuel shortage. Using make-up 4.5 barrels of water per barrel of bitumen produced (and discharging the same, to some unlined settling ponds), makes extraction prohibitive. Normally, we learn by failure. In this instance, we cannot afford it. Worse than in water-rich Athabasca, the massive loss of the environment would be irreversible. The game is not worth the candle.

The rest of this article contains obscenely tedious calculations and numerical data. It relies only on published information, which is used in reverse-engineering mode to divine performance, capacities, and costs. If it were not such a life and death situation out there in the Utah desert, I would strongly advise readers to spend, instead, more time with their

This article was written by

Moshe Ben-Reuven profile picture
202 Followers
Formerly in Aerospace/Defence propulsion area, I made a transition to energy/environment in 1995 to work on renewable energy. Specifically, biomass thermochemical processing into standard drop-in transportation fuels, like high-octane gasoline. I have founded Transmediair, Inc (later renamed Primus Green Energy, Inc) in New Jersey. I am the architect of Primus' proprietary technology, specifically, catalytic biomass gasification and other patents, including a modified version of the Mobil (1972) methanol to gasoline or MTG process. I am currently the President of Verdant Aerospace, LLC, developing technologies for renewable fuels, advanced micro turbines, and non-fracking shale-gas extraction. I have a BSc from the Technion, Haifa, and a PhD from Princeton University, both in aerospace and mechanical engineering.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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