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A ban on finalizing leasing regulations for oil shale development
expired this week, and the Bureau of Land Management is moving quickly
to outline how future exploration will occur on 2 million acres of
public lands.
BLM plans to issue final regulations by year's end that will
determine how commercial leasing for oil shale development proceeds,
including what royalty rate companies will pay to lease land in
Colorado, Utah and Wyoming. Leasing is not expected to begin until at
least 2012.
Advocates of removing the ban, along with a ban on offshore drilling (see related story), declared Monday "American Energy Freedom Day."
"Allowing
the moratorium that bars offshore development and oil shale exploration
to expire is a victory for the American people and our goal of energy
security," Sen. James Inhofe (R-Okla.), ranking member of the Senate
Environment and Public Works Committee, said in statement.
Inhofe
noted that up to 1.1 trillion barrels of oil -- more than 145 years of
domestic supply -- is estimated to be recoverable from oil shale at
prices as low as $35 per barrel, within the first 12 years of
commercial-scale production.
The Green River Basin of
Colorado, Utah and Wyoming is one of the world's richest deposits of
oil shale, a sedimentary rock containing kerogen that, when heated to
extreme temperatures, yields oil.
Enacted as part of last
year's appropriations bill, the oil shale spending limitation slowed
the administration's plan to expedite commercial oil shale development.
The Bureau of Land Management currently oversees an oil shale research
and development program on federal lands, and some companies also
conduct research on thousands of acres they own privately. No company
has ever been able to develop oil shale commercially.
Companies
pursuing oil shale research say they are years away from deciding
whether to move forward with commercial oil shale production.
Opposition and applause
Colorado Democrats Sen. Ken
Salazar, Reps. Mark Udall and John Salazar, and Gov. Bill Ritter
criticized the move toward final regulations.
"Oil-shale
development is years away," Ritter wrote in a letter to President Bush
and Interior Secretary Dirk Kempthorne last week. "It is difficult if
not impossible to set appropriate royalty rates to ensure a fair return
to the state and federal treasuries. Too many questions remain
unanswered about impacts to the environment, the economy and our
communities."
Senate Democrats made a last-minute stab Friday
at blocking oil shale production on federal lands in the West by
including a 12-month extension of the ban in the $57 billion economic
stimulus package, but the measure came eight votes shy of moving
forward.
"Had this misguided moratorium continued, it would
have helped Hugo Chávez stimulate his economy more than our own," Sen.
Wayne Allard (R-Colo.) said in a statement, referring to the Venezuelan
dictator, whose country has a growing petroleum industry.
Shell
Exploration & Production Co., which has research, development and
demonstration projects on three 160-acre plots in western Colorado,
praised BLM for moving forward with commercial leasing regulations.
"Shell is eager to see the moratorium on finalizing oil shale
regulations lifted as the establishment of regulations for commercial
oil shale development is an important step for all companies seeking to
understand the commercial terms on which oil shale development will
take place in order to allow them to plan for the future," said Shell
spokesman Tracy Boyd in a statement.
Shell is eligible to lease 15,000 more acres for commercial development if its tests are successful.
Environmental concerns
The failure to enact legislation
extending the ban elicited dismay from environmental groups. "Oil shale
development is exactly the wrong direction the Congress should be
heading to create a clean energy future and get climate change under
control," Earthjustice President Trip Van Noppen said in a statement.
Environmental
groups noted that even the most advanced oil shale technology will
create as much as 45 percent more greenhouse gases per gallon of
gasoline than would conventional gasoline, and approaches that rely on
strip mining shale will generate twice as much carbon dioxide per
gallon as gasoline.
Another concern is that oil shale removal
is expected to require vast quantities of water -- up to 300 million
gallons a day, or 3 to 5 gallons of water for every gallon of gasoline
produced -- in a drought-parched West that is already struggling to
sustain agriculture, human consumption, industry and the environment.
Environmental
groups also note that oil shale development could destroy up to 2
million acres of prime wildlife habitat that supports tourism and
recreation-based economies throughout Colorado, Utah and Wyoming.
Environmentalists
say more information is needed about the effects and viability of new
oil shale technologies before a leasing program is put in place.
"With
only a few remaining months in office, the Bush administration and the
oil industry's congressional allies will get their wish," Dave
Alberswerth, senior energy policy adviser for the Wilderness Society,
said in a statement. "Now they have set the table for enriching their
friends in the oil and gas industry by handing them a taxpayer funded
gift basket of public lands."
The Salazar brothers and Rep.
Udall have all said they will fight to "restore an orderly process for
oil shale development" when Congress reconvenes next year.
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