Oil-shale engine is still just idling
As anticipated, the Bureau of Land Management released its final draft last week of a plan to allow the leasing of federal lands in Colorado, Utah and Wyoming for commercial oil shale development.
Also as expected, the plan has reignited the political fight between those who want to see more research on oil shale before commercial leasing is allowed, and those who favor a pedal-to-the-metal approach to oil shale development.
The one thing the BLM plan won’t do — despite the claims of some folks from Washington to Colorado — is hasten the day when a commercial oil-shale industry is operating in the West. And that’s not because a moratorium in Congress will prevent further action on the federal leasing — at least until Oct. 1 and for much longer if Gov. Bill Ritter, Sen. Ken Salazar and 2nd District Rep. Mark Udall have their way.
Rather, it is technology that is holding up commercial development of oil shale, and nearly everyone who has been paying attention to the industry knows it. For instance, Shell Oil, the leader in new oil shale technology, has said it won’t be ready until at least 2015 to decide whether to move from its current research stage to a commercial oil-shale operation. And if it decides a commercial operation is feasible, it could be a decade after that before production occurs in commercial quantities.
We agree with Ritter, Salazar and Udall that it doesn’t make sense to authorize leasing of federal lands now for commercial oil-shale development when there are so many unknowns about the technology and how it will affect the environment, water supplies and communities in this region. Heck, even the Bush administration’s Environmental Protection Agency and the U.S. Fish and Wildlife Service have found it difficult to assess the impact of the BLM leasing plan because of the technological uncertainty.
No problem. The BLM moved from a draft plan in July to a final plan last week with barely a nod toward such concerns.
The plan does one thing we believe is important to establish now. It sets a formula for royalty payments oil companies will have to make when and if they reach the stage of commercial production of oil shale. That’s critical as companies consider investments in still uncertain methods for turning oil shale into usable fuel.
If the effort to extend the leasing moratorium in Congress beyond Oct. 1 fails, the way may soon be clear for the BLM to lease 360,000 acres in Colorado for commercial oil shale operations. But nobody should be under any illusion that such action will move the oil shale industry into high gear.