Salazar finalizes oil shale plan; BLM proposes revisions

US Interior Sec. Ken Salazar issued a record of decision that finalizes a development process for federal oil shale and tar sands resources in Colorado, Utah, and Wyoming. The US Bureau of Land Management simultaneously proposed revisions to regulations governing commercial development of those resources.

The two actions make nearly 700,000 acres in the three states available for potential oil shale leasing and 130,000 acres in Utah available for potential tar sands leasing, Salazar said on Mar. 22.

“This plan maintains a strong focus on research and development to promote new technologies that may eventually lead to safe and responsible commercial development of these domestic energy resources,” he declared.

“It will help ensure that we acquire critically important information about these technologies and their potential effects on the landscape, especially our scarce water resources in the West,” Salazar added.

Two US Senate Energy and Natural Resources Committee Republicans were immediately critical. “Far from an ‘all-of-the-above’ energy plan, these proposals do real harm to our efforts to right the economy and improve our energy security,” Lisa Murkowski (Alas.), the committee’s ranking minority member, said on Mar. 23.

“Under this plan, more than 1.5 million acres in Colorado, Wyoming, and Utah with vast quantities of unconventional oil resources are being placed off limits,” she observed.

Harms job growth

Committee member John Barrasso (Wyo.) said Salazar’s decision to reduce the amount of federal land available in the three states for unconventional oil and gas resource leasing would have a negative impact on job growth there.

“This plan will only lead to more uncertainty and discourage companies from investing in American energy production,” he warned.

Oil and gas associations reacted cautiously. “We intend to give BLM’s 100-plus page Friday afternoon announcement a full review as soon as possible,” an American Petroleum Institute spokesman said on Mar. 22.

One thing was immediately clear, he added: The decision to put so much federal acreage off-limits was a step backward for the US energy and economic future.

Salazar’s ROD will amend 10 BLM land use plans. Eligible companies could convert to commercial operations after satisfying conditions of a research, development, and demonstration lease, and meeting basic due diligence rules and clean air and water requirements.

‘A smart approach’

“This is a smart approach that will not only support companies as they work to determine if development is commercially and technically viable, but also yield the necessary information upon which broader scale commercial leasing could be based,” BLM Principal Deputy Director Neil Kornze said.

BLM will solicit comments on its proposed oil shale commercialization regulatory revisions. It will accept comments for 60 days following their publication in the Federal Register, which was expected within a week.

The proposed changes are designed to ensure a fair return to taxpayers, encourage responsible development of federal oil shale resources, and evaluate necessary safeguards to protect scarce water resources and important wildlife habitat, the DOI agency said.

It said the proposed rule identifies several options for amending the royalty rates for commercial oil shale production. BLM said it will consider whether to retain some flexibility to adjust royalty rates when more information is available about production costs, energy inputs, and impacts associated with various extraction technologies.

“Results of ongoing research and development activities, combined with administrative flexibility in setting royalty rates, will allow BLM to determine whether future applications to lease should include specified resource protection plans, and whether other aspects of the regulations need to be clarified,” it indicated.

Contact Nick Snow at nicks@pennwell.com.

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