Estonian Oil Shale Giant Abandons Federal Oil Shale Lease, Loses Colorado River Basin Water Deal
By: Waterkeeper Alliance
Estonian state-owned oil shale company Enefit American Oil is abandoning its lease to mine oil shale on federal public land in northeastern Utah’s Uinta Basin. The decision marks the end of the George W. Bush-era federal oil shale leasing program and came just weeks before a settlement agreement cut the oil shale giant’s planned strip mine and processing facility off from its water supply. The settlement prevents Enefit from exploiting a previous deal to siphon billions of gallons of water from the Green River, above where it flows into the Colorado River, to build the first commercial-scale oil shale mine and processing plant in the U.S. in the Utah desert.
On August 9, 2023, Enefit notified the U.S. Bureau of Land Management (BLM) that it was voluntarily relinquishing its 160-acre oil shale research, development, and demonstration (RD&D) lease in northeastern Utah’s Uinta Basin and would not mine for oil shale on federal public land, citing “extensive consideration of business plans regarding federal oil shale leasing and development.” Surrendering the RD&D lease, issued in 2007, means the company is also abandoning efforts to mine an adjacent 4,960-acre “preference lease right area” of federal public lands.
“The good news is that the Bush-Cheney nightmare vision of strip mining thousands of acres of wildlife habitat on public lands to produce the most carbon-polluting gasoline in the world appears to finally be ending,” said Ted Zukoski, senior attorney at the Center for Biological Diversity. “Enefit was the last company holding an oil shale research lease on BLM land that hadn’t expired or been relinquished.” Major players Chevron and Shell had pulled out of their leases by 2017.”
Just two weeks after Enefit announced it was abandoning its RD&D lease, on August 25, 2023, Deseret Generation & Transmission Cooperative (DG&T), which owns the sizable water right (15 cubic-feet per second, or 3.5 billion gallons per year) that Enefit intended to use to mine and process oil shale on the federal lease and on its 13,000 acres of private land, settled an administrative challenge before the Utah Division of Water Rights. The settlement stipulates that neither DG&T nor any other entity can use the water right for fossil fuel development, including oil shale, effectively cutting Enefit’s planned oil shale project off from its water supply.
“It sure looks like DG&T was taking advantage of Utah law to help Enefit develop what would have been an environmentally catastrophic oil shale mine and processing plant. This settlement ensures that this very large water right can’t be siphoned from the Upper Colorado River Basin to develop oil shale or other fossil fuels. Between the settlement and the abandonment of the federal lease, we’re hopeful that Enefit’s oil shale plans may finally be gone for good,” said Michael Toll, staff attorney for the Grand Canyon Trust, architect of the water right settlement.
Enefit’s original plans called for building the nation’s first commercial-scale oil shale mine and processing plant on private and nearby federal land in Utah’s Uinta Basin, strip mining hundreds of millions of tons of oil shale rock and churning out more than 18 million barrels of synthetic crude oil every year for more than 30 years, all with well-to-wheel carbon emissions up to 75 percent higher than conventional oil. In the process, Enefit would consume more than 100 billion gallons of water over the next three decades from the upper Colorado River Basin — about as much as is consumed by all existing municipal and industrial users in the Uinta Basin combined. Additionally, massive amounts of pollutants would flow into nearby rivers and degrade the basin’s already unhealthy air.
“This oil shale scheme would have been an enormous misuse of dwindling water resources, and an environmental, climate, and public health disaster. We are relieved to see the project has unraveled and the relevant parties have seemingly come to their senses,” said Dr. Brian Moench, president of Utah Physicians for a Healthy Environment. “This is a big win for everyone that depends on Colorado River water, and for everyone that has been fighting to prevent more air pollution in Utah.”
A lawsuit in federal district court challenging the rights-of-way for the project across federal public land is ongoing.
“Oil shale has never been commercially viable in the United States, and Enefit’s decision to abandon its federal lease is further proof of this,” said Michael Hiatt, deputy managing attorney at Earthjustice. “It is well past time to end the oil shale pipe dream and instead embrace energy solutions that won’t worsen the water and climate crises we face in the intermountain West.”
“Enefit’s abandonment of its oil shale lease is a major victory for the overstressed Colorado River Basin and the tens of millions of people and imperiled wildlife that this fragile water system supports,” said Daniel E. Estrin, general counsel and legal director for Waterkeeper Alliance. “We must immediately end development of all new fossil fuel projects on our public lands and justly transition to low-carbon energy sources and smart water management strategies if we stand any chance of protecting our planet and waters from the harshest impacts of climate change.”
“Enefit walking back its plans reinforces what everyone has known for some time—extreme oil is not viable. Besides being hugely destructive, it simply cannot compete economically. It’s having its lunch eaten by renewable energy,” said Ann Alexander, senior attorney at the Natural Resources Defense Council.
“For decades mining oil shale in Utah has been the quintessential bad idea that just wouldn’t go away: an activity that never penciled out and which in every iteration would have hugely damaging environmental consequences for public lands,” said Stephen Bloch, legal director at the Southern Utah Wilderness Alliance (SUWA). “We’re glad to be finally closing the book on this doomsday proposal.”