The Utah Water Quality Board, in a 9-2 vote this week, agreed with the August 2012 recommendations of an administrative law judge (ALJ) upholding a permit-by-rule issued by the Division of Water Quality (DWQ) for the proposed PR Spring an oil sands mine on state land in eastern Utah. The PR Spring project is owned by Alberta, Canada-based US Oil Sands (USOS).
|USOS bitumen extraction process. Source: USOS.|
The project proposes using d-limonene as a solvent to extract bitumen without the need for tailings ponds. (In September, the Canadian Intellectual Property Office approved a USOS patent application relating to the bitumen extraction process.) USOS claims that its extraction process is effective on both oil-wet deposits such as found in the US and internationally, as well as water-wet deposits such as found in Canada’s Athabasca region.
In water-wet oil sands, water sticks to the sand grains, with bitumen and clay in between. The Clark process uses hot water to remove the oil, but hard to break oil-water-clay emulsions are created in the extraction process. Oil-wet sands, by contrast, have the bitumen directly coating the sand grains. For this type of resource, USOS says, the Clark process is not effective; left-over bitumen sticks to the sand, resulting in low recovery and oil sand waste. USOS uses d-limonene to release the oil, leaving clean sand.
US Oil Sands’ 32,005 acres of bitumen leases in Utah’s Uinta Basin make it the largest bitumen leaseholder of public lands in the US. The company expects to develop 50,000 bpd over next 10 years; the PR Spring Project is slated for the first 5,930-acre block.
At specific issue in the WQB decision was a 2008 permit-by-rule granted by DWQ to USOS for the project on the Tavaputs Plateau near PR Spring. Environmental advocacy group Living Rivers filed a challenge to a DWQ 2011 modification decision for the project, contesting both the modification decision and the validity of the evidence used to support the initial permit-by-rule.
The judge found, and the Board concurred, that the DWQ division director did not wrongly interpret or apply the administrative rules in determining that the PR Spring facility could operate under a permit-by-rule, since operations would have a de minimis (minimal) actual or potential impact on ground water in the project area.
|Overlay of the proposed plant site on the terrain. Source: USOS, DWQ. Click to enlarge.|
Background. The PR Spring project area is located in the southeastern Uintah Basin on 213 acres of arid high desert land straddling Uintah and Grand Counties. Much of the oil sands resource (5% - 14% ore grade by wt.) is located in veins beneath 20 to 25 feet of overburden; production would use surface mining. Mined material would be run through onsite crushers, mixed with hot water and d-limonene to create a slurry, then sent through a series of separation towers that would divide the crude oil from the sands. Dewatered processed sands, fine materials, and waste rock would be stored in the mine and in two additional storage areas totaling 70 acres. The mine would be designed to extract oil sands to a depth of 150 feet.
In 2005, Earth Energy Resources (now USOS) initiated the mine licensing process through the Division of Oil, Gas, and Mining (DOGM) for a pilot project at PR Spring. DOGM referred the project to DWQ to determine if the project required a ground water permit.
In 2008, USOS submitted a permit-by-rule demonstration to DWQ after requesting that the PR Spring operation be considered as a permit-by-rule facility under Utah Ground Water Protection Rules. DWQ’s decision to issue a permit-by-rule determination was based on four relevant factors:
The reagent d-limonene is generally nontoxic and most of it would be recovered and recycled in the extraction process.
Tanks and processing equipment would be used to extract the oil from the bitumen, there would be no ponds or impoundments, and most of the water used in the process would be recovered and recycled.
Processed tailings would be contained, would have a relatively low moisture content, and would only contain trace amounts of d-limonene; testing indicated that any volatile and semi-volatile organic compounds leached due to precipitation would occur at non-detectable levels.
Hydrogeological studies indicated that ground water was absent to a depth of between 1,500 to 2,000 feet, with the closest major aquifer, the Mesa Verde Formation, occurring at that depth. Under the mine’s operational design, mine tailings and any potential runoff would not adversely impact ground water.
After evaluating these factors, DWQ issued a permit-by-rule for the project, stating that the proposed mining and bitumen extraction operation would have a de minimis potential effect on ground water quality and therefore qualified for a permit-by-rule. The DWQ stated that “if any of these factors change...this permit-by-rule determination may not apply...(i)f future...knowledge or experience indicates that ground water quality is threatened by this operation...”. Under those circumstances, DWQ could require USOS to obtain a ground water discharge permit for the mining operation.
In 2011, USOS asked for modifications which DWQ determined did not materially affect the facility’s permit-by-rule, since the tailings would still be stored under unsaturated conditions and not come into contact with ground water. One of the proposed operational changes improved tailings dewatering, reducing the potential for free water run-off. The primary factor affecting both decisions was the absence of ground water above a depth of 1,500 to 2,000 feet.
Some concern was expressed about seeps found on the project site and the potential for ground water contamination. DWQ monitoring staff visited the site in the June 2008 to sample seeps located in the project area to determine if the water in these seeps came from perched ground water that could drain into the aquifer, potentially impacting the ground water quality. Perched ground water is generally located in isolated, shallow spaces far above an aquifer. DWQ staff found that these seeps were seasonal in nature, were primarily caused by precipitation (spring run-off) and any perched ground water that could discharge into these seeps would not yield usable levels of ground water. In 2011, USOS drilled 180 bore holes around the mine site, including 55 bore holes within the project area, to determine the presence or absence of shallow ground water. USOS drilled to a depth of 350 feet, more than twice the depth for proposed mining operations. None of these bore holes encountered ground water.
On 15 February 2011, DWQ determined that USOS’s 2011 proposed modifications to its PR Spring Tar Sands project did not warrant a change in DWQ’s 2008 permit-by-rule decision. Living Rivers filed a challenge to this decision, stating that the record did not support a permit-by-rule determination and USOS was required to obtain a ground water discharge permit.
An evidentiary hearing on the challenge was held at DEQ on 16-17 May 2012, with administrative law judge Sandra K. Allen presiding. Judge Allen was charged with reviewing the evidence and legal arguments presented, and make a recommendation to the Water Quality Board (WQB). Since this challenge was filed prior to the effective date of the state senate bill that shifted adjudicatory decision making authority away from the Boards, the WQB was responsible for rendering the final decision.
On 28 August 2012, Judge Allen issued an order upholding DWQ’s permit-by-rule determination. She stated that regulating the discharge through a permit-by-rule was appropriate because ground water in the project area was so scarce that none could be found to monitor or assess for adverse impacts. A clause in the 2008 determination requires USOS to apply for a ground water discharge permit if factors change and lead to discharges that could adversely impact ground water quality. This, according to the judge, provides DWQ with an opportunity to review and revise the permit if the impact to ground water exceeds the de minimis threshold.
According to the ALJ, Living Rivers failed to provide any direct evidence of the existence of shallow ground water or demonstrate that tailings run-off would impact ground water. Accordingly, she found that Living Rivers had not met the burden of proof nor shown it was entitled to the requested relief. Judge Allen recommended that the WQB affirm DWQ’s determination that operations posed a de minimis potential for threat to ground water and uphold the 2011 Modification decision.
The Water Quality Board met on 24 October 2012 to hear oral arguments from attorneys for DWQ, Living Rivers, and USOS regarding the ALJ’s recommendation. Board members asked detailed questions, many of which centered on Living Rivers’ allegation that the definitions of ground water, zone of saturation, and aquifer were not clear in the state administrative code and may have been improperly applied in the permitting decision. While there was general agreement that these definitions had been properly applied for the PR Spring permit-by-rule, the Board subsequently passed a motion asking DWQ to investigate whether changes to the rules were necessary to clarify these definitions for future decision making.
The board’s vote on the matter will become final once the Board Chair signs the final order.
It is anticipated that Living Rivers will appeal the decision in court.