BLM Proposes Changes to Initial Set of Oil Shale R, D and D Leases (1/16/2009)

WASHINGTON, D.C. – The Bureau of Land Management announced today that it has finalized the first round of oil shale research, development and demonstration (R, D, and D) leases, issued in 2006 and 2007 in Colorado and Utah.

The original agreements required that the R, D and D operations be guided by any subsequent oil shale regulations. In order to provide the certainty necessary to effectively manage the R, D and D program, the BLM has finalized the terms of the original six leases to provide the rules necessary to convert them to commercial operations.

The addendum for the six leases provides predictability of relevant procedures and responsibilities regarding the conversion of the leases to commercial leases and the acquisition of a leasehold interest in any or all portions of the commercial lease area in the event that federal regulations governing those activities are not in effect.

The final regulations promulgated on Nov. 18, 2008 incorporated provisions of the Energy Policy Act and the Mineral Leasing Act relating to: maximum oil shale lease size; maximum acreage limitations; rental; and lease diligence. The rule also established a royalty rate based on a time-adjusted rate, beginning at 5% during the first 5 years of commercial production, and then rising 1% every year thereafter until the rate reaches 12.5%.

The regulations also addressed provisions of the Energy Policy Act that establish work requirements and milestones to ensure diligent development of leases. Standard components of a BLM leasing program ─ including lease administration and operations ─ were included, as well as additional NEPA documentation requirements for lease applicants.

A commercial oil shale program could result in the addition of up to 800 billion barrels of recoverable oil from lands in the Western United States. According to the U.S. Geological Survey, the U.S. holds more than half of the world’s oil shale resources. The largest known deposits of oil shale are located in a 16,000-square mile area in the Green River formation in Colorado, Utah and Wyoming. Federal lands comprise 72 percent of the total surface of oil shale acreage in the Green River formation.

The R, D and D leases are just one of several steps designed to harness these vast energy resources. In September, the agency also finalized a Programmatic Environmental Impact Statement designating approximately 1.9 million acres of public lands in the three states as available for potential commercial oil shale development.

The BLM manages more land – 256 million acres – than any other Federal agency. This land, known as the National System of Public Lands, is primarily located in 12 Western states, including Alaska. The Bureau, with a budget of about $1 billion, also administers 700 million acres of sub-surface mineral estate throughout the nation. The BLM’s multiple-use mission is to sustain the health and productivity of the public lands for the use and enjoyment of present and future generations. The Bureau accomplishes this by managing such activities as outdoor recreation, livestock grazing, mineral development, and energy production, and by conserving natural, historical, cultural, and other resources on public lands.

– BLM –