Feds open Utah tracts to oil-shale development
Washington » The federal government Monday opened tens of thousands of acres in Utah, Colorado and Wyoming to oil-shale extraction, clearing a final hurdle for companies wanting to harvest the synthetic energy source.
The Interior Department says the move clears the way so companies know the "rules of the road." The end result, the department adds, could mean tapping about 800 billion barrels of synthetic oil locked in rock formations in the West.
"That is enough to meet U.S. demand for oil at the current consumption rate for 110 years," said Stephen Allred, Interior's assistant secretary of land and minerals management.
But Monday's action -- finalizing the rules for how commercial oil-shale leases will be handled -- doesn't mean you will be fueling your car from oil shale anytime soon. Allred acknowledged any commercial operation could be five to 10 years away.
It "won't be technically viable for several years," he said.
One environmental group called Monday's action another "big gift to Big Oil," while several others said they are considering legal action against Interior for skipping a public protest opportunity.
Interior's move sets up the process for doling out leases, which still will be subject to National Environmental Protection Act analysis and local and state approvals. It also sets the royalty rate for oil shale at 5 percent, far under the current 12.5 percent for domestic oil and gas production.
The oil-shale rate will rise 1 percent each year after five years of commercial production until it hits the 12.5 percent maximum, Allred said in a conference call with reporters.
Utah and others states from which the oil shale is produced could see up to 49 ?percent of royalties from the extraction when the shale is commercially sold.
Sen. Ken Salazar, D-Colo., who has argued for a go-slow approach to oil-shale production out of fear of a boom-to-bust problem, charged that the 5 percent rate was far too low. And he complained Monday that the Bush administration was just trying to push the regulations through as quickly as possible before Democratic President-elect Barack Obama takes over.
"These regulations are premature and flawed," Salazar said in a statement. "The Bush administration has fallen into the trap of allowing political timelines to trump sound policy."
Environmentalists contend oil-shale production -- which involves heating sedimentary rock until it produces a chemical mixture called kerogen -- could permanently harm pristine Western areas.
"Cooking rocks and scorching the earth is not a solution to our energy crisis," said Amy Mall, senior policy analyst for the Washington-based Natural Resources Defense Council. "This is just another government giveaway to Big Oil, which doesn't make sense when we have better, cleaner energy sources available now."
Meanwhile, Sen. Orrin Hatch, R-Utah, called the regulations "overdue" and stressed that governors and local officials remain in the "driver's seat" because of a policy statement in a 2005 law that said Interior "shall" consult with those officials before pursuing leases.
"Anyone who's actually read the current law and these regulations," Hatch said, "knows that we are pursuing a much more methodical and careful approach today."