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Oil shale slowdown

Interior Dept. plans new round of research leases

By Roger Fillion, Rocky Mountain News (Contact)

Published February 26, 2009 at 12:05 a.m.

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The Obama administration has slowed the expansion of oil shale development in western Colorado and neighboring states, reversing a decision issued in the final days of the Bush administration.

Interior Secretary Ken Salazar's decision marks the latest case in which the Obama administration has put the brakes on George W. Bush's energy policy.

Earlier this month, the former Colorado senator scrapped oil and gas leases on 77 parcels of federal land after opponents argued that the drilling would mar southeast Utah.

Salazar said Wednesday that he also would scrap the last administration's decision to issue expanded research, development and demonstration leases for oil shale. The Interior Department will instead offer a new round of leases after taking 90 days of public comment on how the leases should be written.

Salazar told reporters in a teleconference that he is reversing a "midnight decision" that would have locked in low royalty rates and short-changed taxpayers. He also said more time is needed to study the environmental impact and feasibility of commercial oil shale development in the West.

"Those who have fantasized that oil shale is the panacea for America's energy needs have been living in a fantasy land. . . . No one at this point in time can quantify how we're going to get the (oil) out of those rocks and what the associated costs are," he said.

Salazar said he also is scrapping an initial 5 percent royalty rate on oil shale production, saying the rate "sells taxpayers short." Conventional oil and gas production on public land produces royalties of up to 18.8 percent.

Colorado politicians were divided over the moves. Gov. Bill Ritter hailed Salazar's "commitment to take a more deliberate look at the Bush administration's hasty decision."

But Republican Colorado Rep. Doug Lamborn said, "The thousands of jobs that would be created by oil shale development will be lost, in addition to many millions of tax and royalty dollars both to Colorado and the United States."

Jerry Boak, director of the Center for Oil Shale Technology and Research at the Colorado School of Mines, said the decision would "slow things down."

"It's a pretty good idea for him to step back and say, 'How do we want to move ahead on this,' " Boak said.

The Wilderness Society welcomed Salazar's decision.

"Secretary Salazar's action will give the Interior Department and the public an opportunity to weigh in on the oil shale research-and-development program, before more public lands are committed to this problem- fraught industry," the environmental group said.

Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell are among the companies working on oil shale technology.

Tracy Boyd, a spokesman for Shell Exploration & Production Co. in Denver, said Salazar's decision would not have much impact on his company's research- and-development efforts in Colorado. Shell was awarded three R&D leases in 2006.

"We're in sync with Secretary Salazar's philosophy," Boyd said, adding that R&D work should proceed "cautiously and carefully" before commercial development.

Staff writer M.E. Sprengelmeyer contributed to this report.

At a glance

* What is oil shale? A fine-grained sedimentary rock containing organic matter from which oil may be produced, either through heat or a chemical process.

* Where is it found? The largest deposits in the world are found in the Green River Formation.

* What is its potential? The deposits under Colorado, Utah and Wyoming have about three times the proven reserves of Saudi Arabia, according to the Interior Department.

* Mining status: Energy companies can conduct research and pilot projects involving oil shale extraction. Five such research, development and demonstration leases exist in western Colorado.

Comments

  • February 26, 2009

    1 a.m.

    Suggest removal

    Freedom writes:

    To stop to development of Oil Shale in Colorado is the first stupid mistake by the Obama Administration and evidence that he lied to the people about developing our own national resources to make our nation energy sufficient. It is for the national security of our nation to have these resources. By the support of the wilderness society to stop this exploration, that it is a threat to our security and grounds to have a grand jury investigate the Wilderness Society, and Secretary of Interior for treason to the security of our nation and the Constitution.

  • February 26, 2009

    7:14 a.m.

    Suggest removal

    j_davis_tx writes:

    just wait, that is the first definitely not the last
    just remember who voted for him this is their fault
    glad im not one of them

  • February 26, 2009

    8:50 a.m.

    Suggest removal

    Lulu11 writes:

    I think it's Ken Salazar and the reporter who wrote this story that are living in a fantasy world. According to an AP article in Sunday's Denver Post, Europeans are investing billions to tap U.S. Oil Shale projects. And guess how? With new drilling technology. According to the Denver Post article:

    "But the gas, tightly locked in rock formations, had been extraordinarily expensive to extract. That began to change about 15 years ago as producers developed new techniques such as horizontal drilling, where the drill is turned in a right angle to bore into a gas reservoir horizontally.
    Buying into the technology in the U.S. makes sense and could spare European companies years of development, said Don Hertzmark, an international energy expert."

    Here is the link: http://www.denverpost.com/search/ci_1...

    The backlash against the domestic oil/gas industry is a repeat of the same old Democrat nonsense from the 70s. Please file this in your memory banks next time the price of oil skyrockets.

    And to our politicians, if you really care about job creation, let us extract our oil and gas using environmentally safe standards while we wait for your green "voodoo" technology to take work.

  • February 26, 2009

    8:55 a.m.

    Suggest removal

    GoodNewsGuy writes:

    So much for everyone in Colorado government wanting to create jobs and balance the budget. If we launched into oil shale, we would create thousands of jobs and billions of dollars in revenues for the state. But of course the dems don't want that, they just talk about it. The dems also don't want cheap oil because that would cause us to use more oil, which they don't want.

  • February 26, 2009

    9:01 a.m.

    Suggest removal

    funkjunky writes:

    Both of you above are ridiculous. "Obama lied" because he said he was going to develop our own national resources to make our nation energy sufficient? Thats like telling your mom she lied when she said she was going to feed you and she fed you vegetables instead of candy!
    j_davis_tx, are you blaming yourself now for voting for Bush? Twice? Maybe you should be looking at your own mistakes instead of others.
    Have either one of you been down to that part of colorado/utah? I personally would rather see gas get more expensive than see all of USA's beautiful spots get developed for oil mining/drilling. Maybe gas is worth 4$ a gallon.

  • February 26, 2009

    9:16 a.m.

    Suggest removal

    Motherearthisjustdirt writes:

    This is just another step the marxists, under guise of environmentalism, are making to weaken the US economy and exert more control over our market. Never mind that we have more energy available to us through the Alaskan oil fields, or the hugh oil shales in Colorado and northern US up into Canada, or our coasts than all of the middle East. We will continue to rely on the likes of the fickle muslims, russians and the Hugo Chavez in the world.
    We can't go after the oil because it might mar SE Utah? That is the weakest excuse I have ever heard. Who would ever see that SE Utah or north Alaska was marred, and who really cares? That is not irreversible and it will eventually restore itself? Allah damn it all, can't we get some common sense going?

  • February 26, 2009

    10:13 a.m.

    Suggest removal

    onusone writes:

    Exxon $ucks rocks.Oil shale development did not work in the 80's and it still dosen't.Talk about pork.Why throw good money after bad.