Salazar cancels oil shale lease solicitation, plans a new round

The US Department of the Interior will offer another round of oil shale leases in Colorado and Utah and withdraw the Bush administration's proposal for expanded offerings, Interior Secretary Ken Salazar said on Feb. 25.

"We need to push forward aggressively with research, development and demonstration of oil shale technologies to see if we can find a safe and economically viable way to unlock these resources on a commercial scale. The [RD&D] leases we will offer can help answer critical questions about oil shale, including about the viability of emerging technologies on a commercial scale, how water and power would be required, and what impact commercial development would have on land, water, wildlife and communities," he said.

Salazar said that he was withdrawing the previous oil shale RD&D lease solicitation because it contained several flaws, including locking in low royalty rates that would shortchange taxpayers.

"The previous administration offered their RD&D oil shale leases just days before leaving office, made the parcels four times the size of the current six RD&D leases, and then locked in low royalty rates and a premature regulatory framework for those leases. If oil shale technology proves to be viable on a commercial scale, taxpayers should get a fair rate of return from their resource," he said.

Offering leases for 640 acres instead of 160 acres was likelier to provide sufficient reserves to support a commercial operation, BLM said on Jan. 14 when it announced the proposal which Salazar withdrew. The new lease would go to applicants not using technologies used in the first round of oil shale leases, it said at the time.

Salazar said that DOI has submitted a notice which will appear in the Feb. 27 Federal Register asking the oil and gas industry, local communities, states and other stakeholders for their advice on what terms and conditions of the second round of oil shale RD&D leases should be. Comments will be accepted for 90 days.

"Following that, the department will move ahead with a solicitation for RD&D leases, based on sound policy and public input. This will help us restore order to a process that, under the previous administration was turned upside down. We look forward to hearing from the public, industry, and local communities as we move toward offering a second round of [RD&D] leases," the secretary said.

Contact Nick Snow at nicks@pennwell.com

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