Garfield commissioners oppose hike in oil shale royalty
Over the objections of several residents, Garfield County commissioners Monday decided to voice “deep reservations” over what they consider punitive proposed changes to royalties and other rules governing commercial development of federal oil shale reserves.
The commissioners expressed the concern in a letter to the Bureau of Land Management in which they also formally requested 60 more days to comment on the proposals. Although it’s the county’s understanding the BLM has already decided to grant that extra time, BLM spokesman Steven Hall said Monday the latest information he has is that the government plans to provide an additional 30-day comment period to supplement the one that just closed. But those plans could change, he said.
The agency is considering changes that could include increases in royalty rates to a minimum of 12.5 percent, compared to a current 5 percent rate that escalates to 12.5 percent by the 13th year of commercial production.
In their letter, county commissioners say that proposal and other proposed options fall short of the 2005 Energy Policy Act, which requires royalty rates to “encourage development” of oil shale resources while providing a fair return to the United States.
Local residents including Carbondale town Trustee Allyn Harvey and former Garfield Commissioner Tresi Houpt, objected Monday to the concept of subsidizing the oil shale industry. Harvey said a 12.5 percent rate is in line with a lot of on- and off-shore royalty rates for oil and gas development.
Harvey said if oil shale development becomes viable, those benefiting should have to bear part of the infrastructure, environmental and other costs.
“A royalty system is a way to do that,” he said.
Garfield Commissioner Tom Jankovsky, author of the county letter, said he appreciates Harvey’s comments about other royalty rates and will look at them more closely.
However, the letter also contends that if the oil shale rates are at the same level as for conventional oil, the initial cost of recovery will put oil shale producers at a competitive disadvantage, discouraging their efforts.
The county also objects to a proposal that the BLM decide before leasing whether a proposal presents an unacceptable environmental risk. It says this measure is arbitrary and unnecessarily burdensome on companies, and other environmental reviews make it redundant. But Carbondale resident Alex Bethel on Monday defended the requirement as a “completely necessary” insurance provision regarding an industry that has yet to provide much information on its impacts.
Meanwhile, Jankovsky said Monday the county has no plans to sue to challenge the BLM’s recent decision to sharply reduce acreage potentially available for oil shale leasing in Colorado, Wyoming and Utah. Seven conservation groups recently said they intend to sue over the new shale and tar sands plan over alleged Endangered Species Act violations.