The Denver Daily News
October 21, 2009, Peter Marcus

Interior Dept. to offer new round of shale leasing

Salazar attempts to balance research and development with environmental concerns

Peter Marcus, DDN Staff Writer

Wednesday, October 21, 2009

A move by the Interior Department yesterday to offer a new round of oil-shale leasing for Colorado has both industry and environmental groups only somewhat pleased.

The middle-of-the-road announcement by Interior Secretary Ken Salazar aims at pleasing the oil industry by offering additional research-and-development leases, while easing the worries of conservationists by making the leases smaller with environmental safeguards.

Salazar’s announcement yesterday marks a departure from President George W. Bush’s policy, which focused more on the side of lease expansion, as opposed to caution in oil-shale development. In Colorado, the issue is a controversial one as environmentalists point to limited water and electric power, while industry supporters say the exploration is necessary for solving the nation’s energy problems.

The announcement yesterday also includes Utah and Wyoming.

“If we succeed in unlocking oil shale’s great potential, we must first answer fundamental questions about water use, power use and environmental and social impacts of commercial-scale development,” Salazar said in a statement. “With this new round of RD&D leases, we hope to move closer to responsibly and sustainably developing our oil-shale resources.”

Investigation sought

Salazar also announced yesterday that he is calling for an investigation into last-minute so-called bargain royalties set by the Bush administration on 30,000 acres of land in Colorado and Utah. The Bush administration set a royalty rate of 5 percent of revenues made off the potential oil.

Colorado currently has five oil shale RD&D leases, issued in the western part of the state. A sixth lease was issued in Utah.

Stan Dempsey, president of the Colorado Petroleum Association, calls Salazar’s announcement on oil-shale leases a “step in the right direction.” But he is concerned that the Interior Department is not going far enough.

“It’s a good first step, but this is a resource that the country and the world needs, and the companies have to spend a great deal of resources to get a project going, so having it be limited to such a narrow area is of concern,” said Dempsey.

Potential lessees may nominate up to 160 acres for research and development in their applications, the Interior Department said. Up to 480 additional acres could be added to the lease for commercial-scale development if companies are able to demonstrate the ability to produce oil from shale. The current Bush administration policy allows up to 5,120 acres of additional land if companies are able to demonstrate the ability to produce oil from shale.

Gov. Bill Ritter yesterday praised Salazar for having approached the issue with caution. He said oil shale development is necessary, but must be balanced with environmental concerns.

“Colorado has always supported a robust RD&D process to research and evaluate the technologies that could be used to develop oil shale and to better understand the environmental impacts,” said Ritter. “The potential for oil shale development in Colorado, and the economic opportunity that it represents, is huge. 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 and communities.”

Joe Neuhof, the West Slope field director for the Colorado Environmental Coalition, echoed similar concerns. “Even though these are a heck of a lot better than the first round, it still seems like companies should use their opportunities to experiment on private land,” he said. “And at some point, we need to cut off continual research leasing on public lands until we actually see some of the research bear fruit.”