Red Lodge Clearinghouse

BLM issues final rule for shale development

Written by NOELLE STRAUB, Greenwire
Monday, 17 November 2008
The Bureau of Land Management today announced a final rule to govern commercial oil shale development on federal lands that will take effect on Jan. 17, despite concerns by some lawmakers and environmental groups. The rule largely affects the Green River Formation in three Western states, where BLM estimates 800 billion barrels of oil are recoverable. The move comes after Congress allowed a ban on preparing a final rule to expire at the end of September. Although the Energy Policy Act of 2005 had authorized the Interior Department to establish commercial oil shale leasing regulations, lawmakers concerned about the environmental effects of leasing had prohibited the agency from using 2008 money to prepare or publish final regulations. Environmentalists oppose developing oil shale, citing concerns about effects on wilderness and wildlife, as well as greenhouse gas emissions. But supporters say the hydrocarbons bound up in rock formations represent a potentially massive source of domestic energy. In response to comments that the lack of knowledge about oil shale operations make it impossible for BLM to adequately explain how the industry would not have a significant effect on the environment, the agency said today that the National Environmental Policy Act "does not require that the BLM forestall promulgation of regulations until all impacts of commercial oil shale development are known with certainty." The new regulatory framework for oil shale leasing is similar to that used for BLM's other programs, such as coal, oil and gas, the agency said. The final regulations set out technical details such as lease size, sale procedures, rental fees, royalties and other lease terms. The Interior Department will hold a press conference this afternoon to tout the new regulations. BLM received more than 75,000 comments on the proposed rule it published July 23. The new rule works in conjunction with an environmental study BLM released in early September that would allow potential development on 2 million acres with oil shale resources and about 430,000 acres with tar sands. That proposed final programmatic environmental impact statement would amend land-use plans in Wyoming, Colorado and Utah to prioritize oil shale and tar sands development on lands in the most promising geologic areas. The record of decision approving that final plan has not yet been signed. Before leases are issued, site-specific National Environmental Policy Act analyses would have to be completed, and lessees would have to obtain proper state, local and federal permits. Today's final rule sets a minimum bid of $1,000 per acre and a maximum lease size of 5,760 acres. Leases will last for 20 years and continue as long as annual minimum production is met. The production royalty for oil shale will have an initial rate of 5 percent through the first five years of commercial production and increase by 1 percent annually beginning in the sixth year of production until a maximum rate of 12.5 percent is reached. "After careful consideration of the public comments discussed in this rule, the BLM determined that a royalty system similar to that of the State of Utah is best suited to meet the dual requirements of the EP Act to encourage production and to ensure a fair return to the United States," the rule said. The regulation also sets a series of milestones for companies to meet to ensure diligent development of the leases. If production has not begun by the end of the 10th lease year, the lessee would have to pay at least $4 per acre. Click here to read the final rule. Set as favorite Bookmark Email This Comments (0) Subscribe to this comment's feed Write comment Name Email Title Comment smaller \| bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Write the displayed characters
Last Updated ( Monday, 17 November 2008 )

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