BLM cuts oil shale acreage
The Bureau of Land Management on Friday proceeded with plans to sharply reduce the amount of land available in Colorado, Wyoming and Utah for possible oil shale leasing, and to require a research-first approach.
The agency also said it is seeking public comment on proposed revisions to royalty rates and other regulations applying to commercial oil shale development. It has identified several options for amending the rates, including setting a 12.5 percent minimum royalty rate — the same as for oil and gas leases — with the flexibility of the secretary of Interior to increase it later if warranted.
Royalty rates adopted by the administration of George W. Bush consist of a 5 percent initial lease rate that eventually reaches 12.5 percent by the 13th year of commercial production. Interior Secretary Ken Salazar has said that approach shortchanges taxpayers.
The BLM said it has decided to make about 679,000 acres available for potential oil shale leasing in the three states, and 132,000 acres available for potential tar sands leasing in Utah. Only 26,300 oil shale acres are available in Colorado, compared to about 360,000 acres previously.
Overall, the oil shale acreage is down from about 2 million acres the Bush administration allocated for potential commercial leasing. In addition, the acreage is available initially only for research, development and demonstration leases, with the ability for companies to convert to a commercial lease after meeting clean air and water and other requirements.
“This plan maintains a strong focus on research and development to promote new technologies that may eventually lead to safe and responsible commercial development of these domestic energy resources,” Salazar said in a news release. “It will help ensure that we acquire critically important information about these technologies and their potential effects on the landscape, especially our scarce water resources in the West.”
The Obama administration agreed to reconsider the Bush-area shale land allocations and commercial regulations to settle two lawsuits by conservation groups. Conservationists largely praised Friday’s announced decisions.
Michael Saul, an attorney with the National Wildlife Federation, said it’s important that companies show their projects are economically justifiable and environmentally sound before obtaining commercial leases.
“On the whole we think this is a common-sense approach,” he said of the BLM decision.
In a news release, Rifle City Council member and former Mayor Keith Lambert noted that the city long has argued commercial leasing shouldn’t occur until R&D leases show oil shale can be developed responsibly, with minimal impacts.
“The city of Rifle appreciates that attention has been given to these concerns as the impacts of oil shale development have been and will be felt in this community and others,” he said.
But Garfield County Commissioner Tom Jankovsky said the BLM’s land decision won’t satisfy the county and commissioners will have to meet “and decide where we’re going to head from here.”
Asked where that might be, he said, “There’s only one place to head, the same place the environmentalists go when they’re not satisfied.”
Northwest Colorado counties and several in Utah and Wyoming were concerned about the direction the new land plan was heading. Jankovsky said Garfield commissioners will have to talk to other affected counties and see if there might be some agreement on how to move forward, possibly with litigation.
The Colorado acreage made available in the plan is centered in Rio Blanco and Garfield counties, home to what are considered the richest deposits of oil shale in the world.
This oil shale actually is a kerogen that’s locked up in the rock and must be processed through means such as heating to extract it. It differs from the liquid oil now being pulled from shale formations in the United States and other countries through hydraulic fracturing and horizontal drilling.
Western Colorado’s oil shale industry has gone through several booms and busts as companies have sought to develop the resource economically. Several companies now hold federal R&D leases in Colorado and Utah.
Brian Straessle, a spokesman for the American Petroleum Institute industry group, said Friday’s decision “takes 1.3 million acres off the table for potential investment in American energy development. That is a step backwards for America’s economic and energy future.”
U.S. Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, decried locking up land from oil shale development and said the new regulations floated Friday would discourage production.
“Today, President Obama is turning his back on new innovation by driving investment overseas and hurting America’s energy security,” he said.
However, U.S. Sen. Mark Udall, D-Colo., who serves on the U.S. Senate Energy and Natural Resources Committee, said, “Oil shale holds great promise for Colorado and the West, but despite decades of trying to extract shale oil, there has not yet been an economical or ecologically feasible method to develop it. The Interior Department’s plan will ensure that commercial oil shale development is feasible and sustainable before leases are issued. It also will make sure that we do not sacrifice our most precious resource, water, in pursuit of oil shale development.”
Said Bill Midcap of the Rocky Mountain Farmers Union, “The plan just makes all kinds of sense when it comes to conserving our water resources.”
Midcap praised Salazar’s leadership.
“He’s brought a lot of common sense to oil shale, (common sense) that we value out here in the West, something we need more of in this country,” Midcap said.
Friday’s oil shale announcements come as Salazar is just about to leave office. The proposed royalty and other regulatory changes also come more than 10 months later than when the Interior Department had committed to proposing them under the lawsuit settlement agreement.