ExxonMobil, two others seek oil-shale leases

The Bureau of Land Management received two applications in Colorado and one in Utah in its second offering of oil shale research and development leases, agency spokesman Matt Spangler said Monday.

That compares to about 20 applications during a previous lease offering that led to six leases being issued.

Spangler was unable to provide any additional comment Monday about the new lease applications, including who applied. However, representatives of ExxonMobil and Arizona-based AuraSource Inc. said their companies filed an application.

ExxonMobil unsuccessfully sought a lease during the first round of leasing. The company is trying to develop a process involving running an electrical charge through shale deposits underground to heat and free kerogen that can be brought to the surface via wells.

Eric Stoppenhagen, chief financial officer for Arizona-based AuraSource Inc., said it applied for a Utah parcel. AuraSource has been pursuing a surface retort process incorporating technology tested in China.

The decrease in applications from the first round probably is due to the fact that the leases potentially can be converted from 160 acres for research and development to only 640 acres for commercial operations, compared to about 5,000 acres in the initial offering, said Glenn Vawter, executive director of the National Oil Shale Association.

Vawter was disappointed that more acreage wasn’t offered to attract more interest from companies and help them justify going through the leasing process.

David Abelson, oil shale policy adviser for the Western Resource Advocates conservation group, said he’s not surprised there wasn’t more interest in the second round of leases. Companies granted leases in the first round have yet to make progress on them, and companies also have a lot of access to oil shale on private lands, he said.

“The small number of responses is in line with our sense of the need that’s out there,” he said.

Stoppenhagen said a BLM official told him the agency expected few applicants because of the smaller acreage limit and industry concerns that the Obama administration might have a more negative outlook toward shale development processes. Stoppenhagen said the administration’s view is “somewhat of a concern” for his company, but it believes it is offering a more environmentally friendly process for consideration.

Abelson said it was the Bush administration that realized it had offered far too many acres in the first round of leasing. It decided on the 640-acre limit for a second lease plan that new Interior Secretary Ken Salazar later withdrew before announcing a plan that was modified in other aspects.


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