![[Photo ID]: A rich chunk of oil shale achieves a self-sustaining burn at the Anvil Points Oil Shale Research Facility near Rifle, Colorado.](https://mesacountylibraries.org/wp-content/uploads/2023/05/14311815000_fb360071fc_w-300x240.jpg)
The Piceance Basin in Western Colorado contains the largest deposits of hydrocarbons in the world, but efforts to harness the rock that burns have typically gone up in flames. [U.S. Department of Energy]
The oil shale bust of May 2, 1982, known locally as Black Sunday, was one of the most significant moments in Western Colorado history. It’s so significant, in fact, that we think it deserves to be split into two parts to get the full story. In this first part, we’ll take a look at the context behind the oil shale boom, the unprecedented growth it created, and its social and economic ramifications. In part two, we’ll cover the bust and its aftermath.
In the past, oil shale booms got people excited but never quite made a profit. Our first major shale boom in the 1910s-1920s went bust before it had really gotten started. Oil shale’s lengthy and expensive refinement process means that it is only economical to produce when the price of crude oil exceeds the price of shale oil. For most of the 20th century, oil prices remained too low and stayed too consistent for there to be much movement on oil shale, but if prices were to rise and stay above a certain threshold, then oil shale would suddenly become quite profitable.
That’s exactly what happened in the 1970s. The Organization of Petroleum Exporting Countries, or OPEC, was formed in 1960 to give oil-exporting nations in the Middle East collective influence over international petroleum markets. In 1973, OPEC imposed an embargo on petroleum exports to the United States, causing the price of oil to rise 300%. The United States swiftly found itself in the midst of an energy crisis.
Efforts to expand domestic energy production were placed into high gear. With the previously low cost of crude oil previously being the biggest barrier to the success of most unconventional oil operations, the stars were suddenly aligned for oil shale to meet the nation’s energy needs. Western Colorado, with the largest oil shale deposits in the world, captured the attention of observers around the country.
![[Image ID]: A diagram showing the oil shale recovery process. The oil shale is transported from an underground mine, crushed into small particles, and placed into a retort. The retort, in this case the TOSCO II retort, heats the crushed rock to 900 degrees, which separates the "oil" from the rock. The shale oil is then taken to a hydrotreating facility for nitrogen removal and placed in storage tanks. The processed shale is used for re-vegetation in areas disturbed by the mining process.](https://mesacountylibraries.org/wp-content/uploads/2023/04/3-9-1980-Despite-problems-oil-shale-becoming-a-reality-300x245.jpg)
The Colony Project was founded by Tosco, Cleveland Cliffs, and Sohio to commercialize the TOSCO II retort. [The Daily Sentinel, March 9 1980]
Things really hit the ground running in July 1980 when Exxon, at the time the largest corporation in the world, declared its intent to purchase a 60% stake in the Colony Project. Exxon was prepared to invest a ludicrous amount of money in oil shale production, outlined in an ambitious industry statement dubbed the “White Paper.” Exxon projected a $500 billion dollar investment to build up to 150 oil shale plants and 6 strip mines over the next 20-30 years. The strip mines were each promised to be larger than the Bingham Canyon Copper Mine in Salt Lake City, which remains the largest mine in the world to this day.
This plan required Western Colorado to accommodate a monumental shift in its population, economy, and industry. Exxon envisioned its plan to add 1.75 million people to the valley, with oil production reaching 400,000 barrels per day by 1990, and a mammoth 8 million barrels per day by 2010. (The Daily Sentinel, January 18, 1981)
The town of Parachute saw tremendous growth, quadrupling its population from 300 to 1200 residents between 1979-1982. To accommodate this rapid expansion, Exxon got to work on a brand new town, Battlement Mesa, projected to house up to 25,000 residents for the project. In Grand Junction, the boom led to the expansion of the city’s regional airport, new schools and residential areas, and the development of Mesa Mall. The boom affected all sectors of the local economy.
Parachute quickly found itself with more people than available jobs or houses. Trailers, tents, and pickup trucks formed temporary camps on the outskirts of town while Exxon scrambled to develop enough permanent homes in Battlement Mesa to keep up with the skyrocketing demand. Locals complained about unattended young children, unsightly and unsanitary camp conditions, rampant drug use, and the arrival of prostitutes from Denver and other large cities. (The Daily Sentinel, May 13, 1981)
![[Photo ID]: A group of workers outside of the Colony Shale Oil Project examine vegetation grown on processed shale.](https://mesacountylibraries.org/wp-content/uploads/2023/05/14497978485_715ac04330_o-2-300x300.jpg)
The Colony Project (pictured) eased the concerns of some environmentalists by showing that local vegetation could grow on processed shale, but doubts remained about the project’s water usage. [U.S. Department of Energy]
The biggest environmental obstacle, however, was always water. With 3.6 barrels of water needed for every barrel of oil produced, Exxon’s 1990 estimate of 400,000 barrels of oil per day would require 67,000 acre feet of water each year (USGS, Water Resources and Potential Hydrologic Effects of Oil Shale, 1984), an equivalent to 33,044 Olympic swimming pools annually. That’s a considerable strain on the water resources of an arid climate already stretched thin, especially when heavy industry carries a risk of downstream contamination.
Still, others welcomed the growing pains that came with an energy boom. For many, the boom represented a much-needed economic stimulus for their small, sleepy towns. Many even saw the arrival of illegal drugs and prostitutes as a sign that Parachute had truly entered a new era. In an interview with Boomtown Blues author Andrew Gulliford, the editor of The Rifle Tribune, Jim Sullivan, described the attitude some old-timers had:
“It was sort of an old vaudeville […] Parachute even got its first prostitutes for a while. There were hookers operating out of Volkswagen buses. Well, hell! That’s big time. Parachute came of age! It meant the boom was real.” (Boomtown Blues, 147)
Ranchers who had long struggled to make ends meet suddenly had their property values skyrocket overnight. Twelve acres that went for $12,000 in 1974 sold for $115,000 five years later.
![[Photo ID]: Rancher Frank Starbuck stands on a horse drawn wagon with bundles of hay, in front of a snow-covered landscape near Rifle, Colorado. Frank managed 400 cattle entirely by himself because it was too expensive to hire help.](https://mesacountylibraries.org/wp-content/uploads/2023/05/412-DA-10190_12-2248M-300x203.jpg)
Local ranchers like Frank Starbuck (pictured, 1972) embodied the struggling traditional industries that were being displaced by oil shale development. Frank managed his 400 head of cattle entirely by himself by horse drawn wagon. [U.S. National Archives]
It was hard to argue with the millions of dollars that the boomtown hype injected into the economy. Even the project’s biggest skeptics couldn’t imagine going back to a pre-boom economy. As the Western Slope entered into the summer of 1982, everything was looking up. People were making money, the economy was growing, and spirits were high.
Then, on an average, cloudy day on May 2, 1982, it all came crashing down…
____________
We’ll pick this up again next time for part two, where we’ll discuss what happened on Black Sunday. You can read part two here.
Since this happened in living memory for a lot of our readers, we’d love to hear from you guys! Do you remember that time differently? Are there any perspectives we didn’t consider? Anything you’d like to add? Let us know in the comments below! Let’s start a conversation!
For more information on the local history of oil shale, I encourage you to check out Andrew Gulliford’s Boomtown Blues: Colorado Oil Shale 1885-1985, and Armand de Beque and Rob Dal Porto’s lecture on the subject available through the Mesa County Oral History Project. We also have a Local History Thursday post discussing an incident from the first shale boom. Thank you for reading!
![[Image ID]: The Mesa County Oral History Project logo.](https://mesacountylibraries.org/wp-content/uploads/2021/04/MC-Oral-History-Project-logo2.jpg){kind=logo}
Awesome!
Interesting. Since moving I have heard/read reference to Black Sunday but never knew much about it. Thank you.
I remember this very clearly. I was eight years old. We had just moved to Grand Junction a year before. We had trouble finding a place to live and my mom had to take out a loan to buy a house at some ungodly percentage rate. She still lives in that house.
I didn’t really understand what had happened, but I knew it was something bad. I spent my formative years in Grand Junction in the 80s. Black Sunday cast a pall over all of us on the western slope for the entirety of the 80s.
For us kids, it was an incredibly depressing place to grow up. Our parents were out of work, or underemployed, or poor. Our friends were always moving away. Jobs were scarce. There was nothing to do. There were no resources. The famous Grand Valley inversions seemed permanent.
I made a permanent group of friends for whom Black Sunday all affected. We grew up disaffected, disconnected, during the Cold War in an economically depressed town while the rest of the 80s boomed around us. We were outsiders and connected in a way that only growing up under that cloud could.
The Grand Valley is completely unrecognizable today compared to what it was back then. Perhaps it’s because I was a kid and didn’t have the benefit of an adult perspective, but the place was suffocating as a child and adolescent. I don’t live there anymore, but it feels like it has so much more opportunity now. It was a hopeless dead end when I was growing up.
I appreciate you posting this story. This was a formative and deeply affective event in my life, and for the group of people I grew up with. Thank you.
Thank you for sharing your story!
Where is part two?
You can read part two here!
I lived in Parachute then… they had to set up huge trailer parks to house the oil workers… Exxon built the elementary school and middle school so the oil workers kids had a place to go to school as the population increase so quickly … it was a very strange economy …. We lived on Morrisania Mesa but I went to school in battlement Mesa were Exxons schools were. The town was literally built for Exxon but when the cost to get oil out of shale superseded the price to sell it they pulled out…. I may be wrong but I think the government subsidized them for a while … once the government stopped over paying for barrels of oil Exxon pulled out ….and so did thousands of oil workers …. Businesses relying on that population failed … was an economic nightmare
I was 19 years old when I moved from Sterling Illinois after reading a short article of a boom town in Parachute Colorado in 1981, man it was tough, Thousands of people.
invading, a small town with limited supplies and amities. I Rember there was one pay phone next to the Old Bank Saloon and after hours in line it could not take any more quarters to make a call. My address was —– General Delivery Parachute Colorado. Not sure, but somehow, I was able to get a site at the campground on the hill. I worked at the local restaurant for a couple weeks the got hired on with Morrison Knudson in the mines. I would sure like to find some old pictures back then. Thanks Bill Farley
Thank you for sharing! We would certainly love to see some of those old pictures from back then if you find any.
Firstly, let me say in response to the other comments here, the workers on the shale oil projects were not “oil workers”. These people were heavy industry construction workers. Highly skilled construction crafts personnel all. With perhaps the exception of one surveyor. More on that later.
Having said that, back to Black Sunday. I was there. I don’t mean I was alive back then and heard what happened. I mean, I was there, Parachute, Colorado, May 2nd, 1982, Black Sunday. Black Sunday was not the end of the shale oil boom. It was simply an event at the beginning of the end. The actual bust that followed shortly thereafter was a whole separate issue.
Allow me to set the stage…
In the summer of 1981, some 25,000 people had descended on the Rifle, Parachute (formerly known as Grand Valley), Colorado, area, looking to cash in on the Oil Shale projects planned by two major oil companies.
I had been contacted in Houston by a representative of Daniel International Construction Company to come to Parachute as a project designer, and would eventually function as the project mechanical engineer on the retort facility. I arrived in Parachute in September of 1981.
Union Oil of California was the major shareholder of our project to build a 90,000 barrel per day Oil Shale retort facility in eight stages of 11,250bbls/day increments over a period of eight years. The first phase was planned for completion in the fall of 1983 and would begin production… and making money while the next 7 phases were built and brought on-line.
Exxon Oil was the major shareholder of the project “next door” so to speak, and Brown & Root was the contractor. Their intent was to also build a 90,000 barrel per day retort facility. However instead of taking it in stages they were going to build it in one big gulp. It was still going to take them eight years, as with our project but, they would not be producing a drop of oil until the entire 90,000bbd facility was ready to come on-line.
Union Oil and Daniel took over responsibility for the town of Parachute which sat alongside the Colorado River. Parachute had been a town of 250 people before all this began and Union Oil and Daniel set about building new roads, schools, and housing to accommodate the approximately 2500 construction personnel, and their families. That is to say, around 7000 folks. Union oil also built housing in Rifle, as well as in Grand Junction some 50 miles away.
Exxon and Brown & Root laid claim to Battlement Mesa. Battlement Mesa was just that, a large flat mesa just across the river from Parachute. They built a town… where there had been none, to accommodate approximately the same number of folks.
And we commenced to build.
A new road was cut alongside Parachute Creek that would accommodate the heavy equipment to be brought in. The road would wind some eighteen miles up the valley to near the top of the mountain. Turning right, onto this road out of Parachute, the first mile was the Brown & Root staging area where heavy loads were received and made ready for hauling up the steep grades by the teamsters.
The next 7 miles was Union oils tank farm, retort facility, staging area, temporary singles quarters, including four miles for future expansion.
The next 6 miles was Exxon’s Tank Farm, Retort facility, and mine.
A couple of miles above that was Union Oils mine.
We were all having a real good time, building stuff, and living the good life that only Colorado can offer. It was a grand ol’time I’m here to tell you. For my part, being a single, 30 year old guy, in the middle of one of Americas greatest resort states, surrounded by more single women than I’d ever seen on a job, making more money than I had ever made in my life… I thought I’d died and gone to Heaven. Did I mention that I was driving a Corvette?
Then came Black Sunday.
It started out like any other Sunday, and I remember it well. It was an absolutely gorgeous spring day in Colorado. Earlier in the day I had been cruising with friends up through Rifle Pass, north of Rifle, Colorado with a female co-worker from Minnesota. One could not have asked for a more perfect day. By early afternoon, around two, we had made our way back to Parachute and were just arriving at the softball field where a bunch of folks had gotten together for a game and there was a break in the radio programming for an important public service announcement.
This sounded serious and as I pulled to a stop while parking I turned it up just a bit. The announcer stated that The Exxon “Colony” Oil Shale Project had been cancelled. As many people had radios playing the entire place came to a sudden stop as everyone began to listen. The announcer continued “This is an official announcement by Exxon Oil Company that the Colony Oil Shale Project has been cancelled. All employees of Brown and Root, their subsidiaries, and sub-contractors are NOT to report to work on Monday, May 3rd or Tuesday May 4th. All employees are to report to work on Wednesday May 5th to receive final pay checks and vacate company provided housing no later than Friday May 7th. This does not affect the Union Oil Shale Oil Project.
“I repeat, this is an official announcement by Exxon Oil Company that the Colony Oil Shale Project has been cancelled. All employees of Brown and Root, their subsidieries, and sub-contractors are NOT to report to work on Monday, May 3rd or Tuesday May 4th. All employees are to report to work on Wednesday May 5th to receive your final pay checks and vacate company provided housing no later than Friday May 7th”. This does not affect the Union Oil Shale Oil Project.
And that was that… almost, you know, except for the riots, and the prospect of the national guard being called out to restore peace, and the Governor flying over in a helicopter.
“They” closed ALL the bars and liquor stores for the next few days. Which in and of itself was almost enough to start a riot. But reality set in and by Friday Battlement Mesa, Colorado, went down as the most expensive ghost town in history.
Now you might ask… what caused this.
If you think it was the collapse of the price of oil, you would be wrong.
A construction error caused the collapse of the Exxon Colony Oil Shale Project.
During part of March and most of April Brown and Root had been making a 24 hour a day, 30 day concrete pour for the Exxon mine entrance. Keep in mind here that they had spent a year digging the mine opening, 50 feet high by 50 feet wide and several hundred feet long/deep into the mountain, set forms, and commenced placing concrete. After 30 days of pouring around the clock they stripped the concrete forms away and re-surveied the entrance for certification and low and behold… it was three feet out of place.
Okay, three feet doesn’t sound like much to me and you but… apparently when you are talking mines and geology, especially when you are talking about hollowing out the inside of a mountain so you still have a mountain when you are done except a mountain supported by 50 foot square columns on 100 foot centers… three feet makes a difference. Or at least it did to the U.S. Geological Survey folks, and the Mine Safety people. The result was that the entire geology of the mine was going to have to be redone. I’m thinking here at a cost that was going to be astronomical and a delay in the project that was beyond reasoning.
This is where a third party comes in. That being Marathon Oil Company. Marathon Oil was a major shareholder in the Colony venture. Also, Marathon had a clause in the agreement that they could pull the plug on their money anytime they decided to. After having spent a couple of billion bucks resulting in nothing more to show for it than a big hole in the side of the mountain that was three feet out of place… Marathon pulled the plug. Exxon fired Brown and Root and thus was created Black Sunday.
Well, you might say, that was the beginning of the Oil Shale bust. The answer to that would be yes and no. Certainly it could be said, but the closing really, as stated above had nothing to do with the bust. Our project, the Union Oil/Daniel Oil shale project continued on full bore.
The real bust came when several months later when OPEC began to open the oil spigots back up, having had a choke hold on us since the seventies. This “opening” of the spigots was a result of all the synthetic fuels plants being built at that time to “gain independence from foreign oil”. Most importantly were the coal liquifaction projects and of course the oil shale projects. It scared the bejesus out of OPEC (they could see themselves eating a lot of sand in just a few short years) and OPEC quite literally flooded the world market with oil causing the price (about $35/bbl at that time) to fall out the bottom.
America of course responded exactly the way OPEC had figured they would and went running back to cheap (7$ a bbl) foreign oil.
So there you have it. At a time when America had OPEC on the ropes, should have told OPEC we didn’t want their oil no matter how cheap it gets, and should have forged ahead with our synthetic fuels programs, instead our own government shut it all down.
Union Oil of California would go on to complete its first phase, though it would shelve the next seven phases for the time being, speculating the price of oil would make a comeback. However, OPEC carefully regulated the price of oil over the next decades, being careful not to allow the price to rise to a level, or for a duration, that would cause the U.S. Government to reopen the synthetic fuels programs of the late 70’s and early 80’s.
And that, as Paul Harvey would say, is the rest of the story.
I really appreciate the time and effort it must have taken to write this out. Thank you for sharing your story and providing plenty of additional details and context that only someone who was there could have known.
It was my pleasure to do so Kristen.
If there was one thing I could add, it would be in regard to the quality of life on the project. While I cannot speak to life on the Colony/Exxon project, I can speak to life on the Union Oil project… It was fantastic.
Absolutely top-notch accommodations. From the fully furnished family apartments in Rifle, Parachute, and Grand Junction, to the private rooms and cafeteria in the singles camp, there was no expense spared. Union Oil, and Daniel took very good care of their personnel.
While I focus on living in the present, with an eye on the future, I have often spent time over the last 40 years… wishing they would do it again. And while I am no longer 30, I would be back there in a heartbeat if they called.