(Oil & Gas 360) – After ten years and tens of millions of dollars, Uinta Basin oil producers are hoping to end 2024 on a positive note when the Supreme Court will review an earlier lower court ruling by the U.S. Court of Appeals finding that inadequate environmental analysis should preclude construction of a nearly 90-mile rail line to deliver oil from the basin south to more markets.
The case involves Utah’s Seven County Infrastructure Coalition versus Eagle County in Colorado and asks whether the National Environmental Protection Act (NEPA) requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority. The Supreme Court is slated to begin deliberations on December 10.
The twelve-thousand square-mile basin (about the size of the state of Maryland) has been an oil and gas producer for decades, but it has been plagued by processing and transportation issues that have forced producers to sell their oil at a discount due to lack of access to markets, which is almost exclusively Salt Lake City.
The basin is known for its paraffinic oil; its waxy qualities require special treatment (primarily heating to keep it viscous) for both transport and refining.
Some of the bigger operators currently in the basin include Ovintiv, Javelin and Uinta Wax Operating, and earlier this year SM Energy spent over $2.5 billion to acquire over 37,000 net acres in the basin from XCL Resources.
The Seven County Infrastructure Coalition was formed in 2014 to start building the railway from around Myton, Utah to run south to connect with the national railway system that for a large part of Utah generally runs parallel to Interstate 70.
However, in many locations the railway also parallels the Colorado River, which is the primary source of water for over 40 million citizens in the southwest part of the country. Eagle County and other opponents to the project say regulatory officials did not adequately analyze the threats to the water system from a potential oil spill.
The project is a formidable engineering task requiring five tunnels, including three through the Ashley National Forest. The rail would also go over the 12,800-foot high Anderson Pass. It took approximately six years to complete the intercontinental railroad linking Sacramento, California to Omaha, Nebraska. It was completed in 1869.
The state of Utah has formally endorsed the project. The seven counties in the coalition are Daggett, Duchesne, Emery, San Juan, Sevier and Uintah.
The project also has the official support from the second-largest Native American reservation in the country, the Uintah and Ouray Indian Reservation.
By Jim Felton for oilandgas360.com
