Resource rich: Utah oil sands projects face fuel pricing pressures.

• Author: Coon, John
• Position: Focus

Utah's economy is robust in almost every industry--with the notable exception of natural resources and mining. While other private sectors continue to add jobs in Utah, the natural resources industry, hit hard by ultra-low oil prices, has shed 1,100 jobs over the past 12 months, according to Department of Workforce data.

Nowhere is that more evident than the Uinta Basin, where oil producers are scaling back operations. Another casualty in that region are the fledgling oil sands companies that hope to develop commercial-scale oil sands projects in the basin.

In early February, U.S. Oil Sands announced it would "reduce the pace of field construction" on its oil sand project near the Book Cliffs outside of Vernal. The Calgary-based company began to set up shop in the Beehive State in 2015, acquiring mining rights to a 50-square-mile area that contains up to 180 million barrels of untapped oil just waiting to be extracted. U.S. Oil Sands has spent millions to develop its unique extraction process and install the needed infrastructure.

The company says the build-out of the project is 85 percent complete, but despite the time and money already spent, the rippling impacts of energy prices have forced a pullback. In a project update released in February 2016, the company says two of its contractors have closed their Utah operations due to the buckling natural resource sector--essentially forcing U.S. Oil Sands to halt construction, with the exception of "critical path items and areas that will lead to the most efficient restart of full construction operations in the future."

With no end in sight to the global oil glut, it's hard to predict when prices will rise enough to make oil sands extraction financially feasible. Other oil sands projects are ongoing in the basin, and companies still believe they have the technology to extract oil from the sands cleanly and efficiently.

Extracting change

No other place in the United States has richer deposits of oil sands than Eastern Utah. Our state, which boasts eight major deposit areas, contains 55 percent of all the oil sands deposits in the United States. Some estimates pin Utah's oil sand potential at 32 billion barrels of oil.

Oil sand extraction could represent a game-changer for Utah's oil industry. Advances in extraction processes could enable Utah to produce a high-quality crude oil from sands that could not be tapped as a reliable fuel source just a few years ago.

MCW Energy CEO Jerry Bailey...