BLM review of oil shale RD&D noms moves to state offices

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 15 -- The US Bureau Land Management’s Washington office completed its review of three nominations for oil shale research, development, and demonstration (RD&D) leases in Colorado and Utah, and has forwarded them to its offices in those two states for further review, the US Department of the Interior agency announced on Oct. 13.

It said that it received the nominations early this year after announcing a potential second round of oil shale RD&D leasing in November 2009 following the awarding of six leases in 2007 in an initial round. ExxonMobil Exploration Co. and Natural Soda Holdings Inc. separately submitted nominations for tracts in Colorado, while AuraSource Inc. filed one for a Utah site, BLM said.

This second round of oil shale leases will help determine if oil shale is a commercially viable energy source by addressing whether technologies are feasible, what their impacts would be on local communities and the environment, and how much water they would require, BLM Director Robert V. Abbey said.

“BLM is committed to careful consultation with all affected stakeholders in the oil shale process, including states, counties and [American Indian] tribes,” he continued. “The analysis that our state offices will now conduct will help us chart a wise path for western shale oil resources.”

The Colorado and Utah state offices will now conduct National Environmental Policy Act reviews of the three nominations, which may take 4-18 months to complete depending upon the complexity of resource issues to be analyzed, Abbey said.

In this second round, BLM solicited nominations of up to 160 acres to conduct oil shale RD&D for a 10-year lease term. Applicants could also identify up to an additional 480 acres to be reserved for a potential commercial lease, for a total of 640 acres. BLM said that it reduced the lease size available for commercial development from the first leasing round’s 5,120 acres because the substantial reserves represented by 640 acres are more than adequate for a major oil shale production operation.

Diligence requirements
The proposed second-round oil shale RD&D leases would contain substantial diligence requirements, including specific time frames for submitting development plans, obtaining state and local permits, developing infrastructure, and submitting quarterly reports, it indicated.

It said that earlier this year, it formed an interdisciplinary review team with representatives of Colorado, Utah, and Wyoming’s governors; the US Department of Energy; and the Colorado School of Mines. The team recommended that all three nominations be advanced, BLM said.

In a separate statement, Colorado Gov. Bill Ritter Jr. (D) said on Oct. 13 that the oil shale RD&D program that US Interior Sec. Ken Salazar and Abbey are implementing has lease size constraints, due diligence requirements and other elements which Ritter has long supported.

“The potential for oil shale development in Colorado, and the economic opportunity that it represents, is huge,” he maintained. “But the prospect of commercial-scale activities raises significant questions about how oil shale can be successfully integrated into our state’s economy and how we can protect the state’s environment, water, wildlife and communities. The RD&D program is wisely designed to answer these fundamental questions.”

Contact Nick Snow at nicks@pennwell.com.

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