Industry wants steady development, but others seek a ‘no-go’ approach
By Brad McCloud
Is the Bureau of Land Management’s new proposal a “go slow” or a “no go” approach? Many would argue that it is the latter.
Recently, the BLM published a proposed plan the agency claims is designed to “promote research, demonstration and development (RD&D) of oil shale and tar sand resources on BLM-administered land in Colorado, Utah and Wyoming.”
Environmental groups have responded both by supporting the proposal and being critical of a plan they see as not restrictive enough.
Colorado Sens. Mark Udall and Michael Bennet have called the BLM’s plan a measured response and “the way to proceed in an environmentally sound, socially responsible and economically viable way.”
On the other hand, Sens. John Barrasso of Wyoming and Orrin Hatch of Utah both questioned the sincerity of President Obama’s “all of the above” energy approach and criticized the BLM publically, calling for the department to reverse its decision.
Some people with the state of Colorado have applauded what they call a “go-slow” approach. However, locally, the Garfield County Board of Commissioners recently voted to file a formal protest with the BLM for its proposed plan, and the commissioners have submitted a “request for information quality act review.”
So, what are the facts?
The facts are the Piceance Basin contains the richest deposit of oil shale in the world (about 1.5 trillion barrels of potential oil). Not all of that resource is recoverable, but certainly hundreds of billions of barrels will be. That’s enough to supply the petroleum needs of the United States for more than a century.
Several companies believe they have a pathway to sustainably produce oil from oil shale in an economically viable and environmentally acceptable manner that meets or exceeds regulations.
Oil shale developers receive no federal loans, no loan guarantees or price supports. They, not the taxpayer, bear all the financial risks. If they are right, they will produce a tremendous amount of wealth, to be shared with their employees through jobs and with our communities and the country via royalties, taxes and economic growth.
A million barrel-per-day industry in Colorado (which would ramp up over years, not overnight, as some fear) would directly and indirectly produce annual royalty and tax revenues comparable to the state’s current general fund budget. In addition, displacing a million barrels of imported oil per day would cut off hundreds of millions of dollars of American money from flowing to unfriendly regimes.
The critical question for oil shale development in the United States is whether we should follow the current “go-slow” approach of industry or the “no-go” approach that some appear to favor.
The opposition is relentlessly repeating the argument that industry might rush ahead faster than is prudent, buy up federal leases at fire-sale prices, and then either do nothing or cause another boom-bust, a la 1980, meanwhile killing agriculture and hunting on the Western Slope.
These concerns are simply fabrications by those trying to kill oil shale development in the disguise of prudence. Industry lost billions of dollars on oil shale investments in the 1980s due to the collapse in world oil price. Because of this, it is proceeding at a much slower and calculated pace in order to avoid making the same mistake twice.
Some parrot concerns about water usage, but the so-called uncertainties are primarily in the minds of the misinformed and those who wish to misinform. Industry officials have stated consistently only one to three barrels of water would be needed per barrel of oil, and the fact is the industry already owns the water rights it may need.
Industry is well aware of the technical uncertainties of development, and those uncertainties affect the pace at which industry will proceed.
One unnecessary uncertainty is the oscillating governmental policy that alternately encourages and then discourages oil shale development every four years or so (a much shorter time than the decades needed to implement a significant industry).
The BLM’s new programatic environmental impact statement has removed nearly all the desirable and useful leasable lands for development in Colorado. Most of what is left is too small or irregularly shaped to be commercially attractive.
Despite BLM’s statement that it recognizes the contractual rights of current RD&D leaseholders, it is proceeding to remove most of those lands from its resource management plans.
The elimination of prime lands from the commercial leasing program and the generally antagonistic perspective of the latest environmental document toward oil shale leasing makes companies question whether they will ever be allowed to convert their RD&D projects to commercial ones.
Industry has to consider that uncertainty, just as it does the vicissitudes of politically unstable countries around the world. If industry decides to invest elsewhere, the biggest loser is Colorado and those living on the Western Slope.
Many people claim BLM’s 2008 decision on oil shale was a “go-slow” approach that allowed for industry to use RD&D to develop the best technologies while providing regulation ensuring companies could be environmentally responsible and profitable.
In order to work toward energy independence and to improve our economy, an “all of the above” energy policy is necessary. And oil shale should be part of that energy portfolio.
Brad McCloud is the executive director of Environmentally Conscious Consumers for Oil Shale, based in Grand Junction.