By Russ Corey Staff Writer
WOLF SPRINGS — A spokesman for the State Oil and Gas Board said the board is no longer developing regulations for the mining of oil-bearing sandstone.
Marvin Rogers, the board’s general council, said the decision was made because of a lack of interest in mining those materials.
“The board has seen no reason to proceed with those regulations since there is no interest in oil sands at this time,” Rogers told the TimesDaily on Thursday. “There was no reason to put them on the docket to proceed and adopt them.”
The board began investigating the regulations after a company began purchasing land in northwest Alabama where deposits of oil-bearing Hartselle sandstone lie relatively close to the surface.
Wolf Springs-based MS Industries purchased thousands of acres of land in Colbert, Franklin and Lawrence counties with plans to surface mine Hartselle Sandstone, then extract crude oil using a proprietary process.
When the company began operations in the summer of 2010, oil was selling for around $100 per barrel and eclipsed $120 per barrel in 2011.
In June 2014, however, the price of oil began to decrease and Friday was hovering around $33 per barrel.
In August 2014, MSI General Counsel Chuck Kelley announced the company was placing its plans on hold while the state developed oil sands mining regulations. Kelley said MSI officials met with State Geologist Nick Tew and members of the State Oil and Gas Board to discuss the regulations. Tew also is the supervisor of state board.
At that time, Kelley said MSI learned the state was “probably a year or more away from having regulations in place.” A year later there were still no regulations.
“We cannot and will not mine oil sands until the Oil and Gas (Board) regulations are approved and those regulations, once adopted, will tell us a great deal as to whether our plans are commercially viable,” Kelley said in August 2014.
Kelley had little to say about the Oil and Gas board’s decision and how it will impact MS Industries’ future plans.
“We really have no response or reaction to Mr. Rogers’ comment, as our permit applies to non-fuel clay, sand, ores and other minerals,” Kelley said in reference to a National Pollution Discharge Elimination System permit issued by the Alabama Department of Environmental Management. “We intend to move forward consistent with the parameters of the permit.”
He made no other comments regarding the state’s decision concerning oil sands mining regulations.
The company was recently granted a National Pollution Discharge Elimination System permit to mine materials other than oil-bearing sandstone at a site near its Wolf Springs headquarters.
Seth Newton, general counsel for the State Geological Survey, said low oil prices and the current lack of interest in oil sands mining in Alabama impacted the board’s decision.
“Because of the current low oil price and the corresponding lack of interest in the economic development of oil sands in Alabama, there is no urgency for the continued development of oil sands regulations,” Newton said.
He said the Geological Survey of Alabama is continuing its scientific assessment of oil sands so it will be better informed when the economic conditions of the development of oil sands in Alabama is more favorable.
Rogers said both the Oil and Gas board and Geological Survey were studying the development of oil sands mining regulations.
”Undoubtedly this is not something that will assist MSI,” said Florence resident John Crowder, a member of the Shoals Environmental Alliance and critic of MS Industries’ plans. “Once world crude oil prices get back to where the mining of oil sands is economically feasible, I suspect there will be considerable pressure on the Oil and Gas board to complete the regulations. I hope that will not produce undue haste and an inferior set of regulations.”
Florence resident and SEA member David Cope said the market price for crude oil has dropped by around 70 percent since MSI began purchasing land in northwest Alabama.
“There is no doubt that with crude oil prices now at a 12 year low, MSI would lose a significant amount of money by continuing to develop and then operate such a facility,” Cope said. “It appears that MSI has chosen instead to use a portion of the land it acquired in Lawrence County to mine sandstone and other road construction material (aggregate) as the only option for getting a return on its investment. The jury is still out on whether this plan can produce the revenue needed to recoup the large investment by MSI in this venture.”
Tennessee Riverkeeper also expressed concern about the effects oil sands mining would have on the environment.
“Tennessee Riverkeeper is relieved that the Alabama Oil and Gas Board is no longer developing regulations for the mining of oil-bearing sandstone,” Executive Director David Whiteside said. “Studies have demonstrated that this mining and processing can release carcinogenic and toxic pollutants to groundwater and the air. This pollution can negatively impact the public health of nearby communities, as well as aquatic ecosystems.”