Giant operation in Utah gives rise to oil boom, though challenges loom.

Energy » Newfield Exploration producing lots of crude amid hurdles

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Environmental costs • The production and contracts are important, because even though Utah, Colorado and Wyoming have some of the largest known oil shale deposits in the world, Utah imports 70 percent of its crude, mainly from Canada, Colorado and Wyoming.

But producing crude in Utah isn’t easy. Although advances in technology have aided in the extraction of what’s commonly known as black and yellow wax oil, Utah oil is so thick that it solidifies unless kept warm. Unlike sweeter varieties that can be shipped via pipelines, most of the crude from the Uinta Basin is trucked in insulated tankers, which must reach their destination within a few hours, making Salt Lake refineries the only viable market right now.

Despite these challenges, industry analyst and financial writer Bret Jensen, based in Miami, said , "I still like Newfield. They are moving more to oil and liquid production, and Utah is an extremely friendly business state. There’s always been mining and [agriculture], and now throw in oil in a state that’s conducive to furthering those businesses, that’s a huge plus."

At this point, though, state officials have said they don’t know how to handle the transportation issues. In December, the first phase of a study is expected to be completed that is weighing options such as converting US-40 — now just a two-lane road in many stretches — into a "super highway," adding a railroad to the basin, or building facilities to partially refine crude there so that it could be transported through pipelines.

There are other environmental costs associated with oil development.

Last week, early findings of a $5 million study were released on why eastern Utah has logged some of the nation’s highest ozone-pollution readings in recent years. The key pollution culprits making the Uinta Basin’s wintertime air unhealthful appear to be oil and natural gas wells, along with exhaust from cars and trucks. Weather also was listed as an important factor.

The Winter Basin Ozone Study comes on the heels of federal land agencies approving another 5,329 gas and oil wells for the basin in addition to the 10,000 or so already in operation.

Kathleen Sgamma, with the energy trade group Western Energy Alliance, is pushing to continue the study "so that effective mitigation can take place, while providing energy for America and jobs in the Uinta Basin."

Taking steps • Newfield officials say they have taken steps to lessen environmental impacts.

In April 2011, the company opened a state-of-the-art water- treatment plant. The main portion of the Sand Wash facility recycles up to 10,000 barrels per day of the water that comes out of the well bore along with oil and gas. The water is injected back into the producing formation for enhanced oil recovery. The facility also can recycle up to 18,000 barrels per day of water needing additional treatment that otherwise would be unusable.

Reed Durfey, Newfields’ Uinta Basin district manager, said traditional oil field operations generally send water to an evaporation pit or disposal wells, but "we recycle all of our water."

Starting in November, Newfield will open its gas and oil separation plant, designed to process up to 30,000 barrels per day of produced water and oil mixture (emulsion) from more than 200 wells. Here, the oil will be separated and prepared for sale, while the water is to be sent to the Sand Wash plant for recycling. This facility, along with an associated gathering system, will allow Newfield to send water and oil to a single delivery point, eliminating the need for up to 300 truckloads of produced water per day.

Newfield’s expansive operations don’t intimidate Myton Mayor Kathleen Cooper, who notes the company uses the town’s address, even though its offices are just outside the municipality’s boundaries. She remembers contacting Newfield for help on the opening day of the Myton Daze June festival when the town’s only worker was called away.

"There was nobody else who could set up all of our tents and tables," she said. "Within a few minutes, Newfield sent out several truckloads of people asking what we needed them to do. They seemed like white knights."

dawn@sltrib.com

Twitter@DawnHouseTrib

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