Oil shale royalty hike proposal concerns counties

The counties and town near the world’s richest deposits of oil shale need more time to evaluate proposed changes to oil shale regulations, the Associated Governments of Northwest Colorado said.

The organization, which represents Delta, Garfield, Mesa, Moffat, Montrose and Routt counties, has asked the Bureau of Land Management to extend by 60 days the public-comment period on the proposed regulations.

The comment period is now set to expire on May 28.

The Obama administration is proposing changing the royalty rate for oil shale set by the previous administration.

“Sweeping changes to the regulatory environment and leasing terms, such as the proposed adjustments to the oil shale royalty system, present significant impacts not only to potential future development, but also to existing projects,” the organization wrote to the bureau. “These changes can affect local employment, tax revenue, infrastructure development, and a myriad of other factors. Understanding the full extent of these impacts is not a casual undertaking; we are asking your agency to allow us the time to properly conduct the comprehensive and detailed review that is called for by these amendments.”

The current oil shale rules would allow oil shale developers to pay a 5 percent rate over the first five years of production, but that would increase by 1 percentage point each year after that until it reached 12.5 percent, which is the current rate for conventional oil and gas production on federal lands.

The lower rate at the beginning was intended to acknowledge the level of investment needed to begin production.

The Obama rule would toss out the previous approach in favor of other options, possibly including tying the royalty rate to the price of oil; setting royalty rates at the time oil shale leases are offered; modeling royalties after coal leasing, or establishing a minimum royalty of 12.5 percent and giving the Interior Department the latitude to increase it.


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