Secretary Salazar Offers New Round of
Oil Shale Research, Development and Demonstration Leases
February 25 2009
Announcer: This is a Podcast from the U.S. Department of the Interior.
Secretary of the Interior Ken Salazar announced today that the Department will offer a second round of research, development and demonstration leases for oil shale in Colorado and Utah and withdraw the previous administrations proposal for expanded RD&D leases. Here are Secretary Salazar’s remarks prior to his q and a with the press.
Today, I am announcing that the Department of Interior will move ahead to offer, on a new and fair set of terms, a second round of research, development, and demonstration leases for oil shale in Colorado and Utah.
I want to be clear: this is a new solicitation for RD&D leases that we will offer. They will not be the same as the RD&D leases that the prior Administration crafted and offered on January 14th. I am withdrawing that January 14th solicitation because in my view it was a midnight decision and it was flawed. The previous Administration offered their RD&D oil shale leases just days before leaving office, made the parcels four times the size of the current six RD&D leases, and then locked in low royalty rates and a premature regulatory framework for those leases.
The Administration’s last-minute oil shale RD&D leases don’t pass the smell test and therefore I have set them aside.
I do believe that we should offer a second round of R, D&D leases, and we will. We have submitted a notice that will appear in the federal register on this Friday. That notice will ask industry, local communities, states, and stakeholders to give us their advice on what the terms and conditions of the second round of R&D leases should be. That comment period will be open for 90 days, and then we will move ahead with a solicitation for a new round of leases, based on sound policy and public input with a good framework for the second round.
This step towards issuing a second round of research-development leases for oil shale will help us restore order to a process that, under the previous Administration, was turned upside down.
In the West, we have been trying to develop oil shale on a commercial scale for over a century. The last time it seemed we were close to unlocking the mysteries of oil shale – 1982 – we hit a bust that left Western communities holding the bill. The day is still known in the West as Black Sunday, and communities in Colorado are still trying to clean up the mess that was left behind.
Developing oil shale on a commercial scale will not be easy: the kerogen we are trying to extract is locked up in rock. The rock has to be heated to boil the kerogen out of it. The process requires large amounts of water, power, and land disturbance. Nobody has yet proven it can be done safely and affordably on a commercial scale.
That’s why the research, development, and demonstration leases are so important.
In the Senate, as Colorado’s U.S. Senator, I helped author the provision in the 2005 Energy Policy Act that created the research and development leasing program. Under the program, BLM offered six 160 acre parcels for companies to do research and development of oil shale technologies.
This research and development program, which we will expand under the second round of leases, is an absolutely necessary first step.
It will help us answer the following questions about the feasibility of commercial oil shale development:
First, are the technologies under development viable on a commercial scale?
Second, how much water would be required for commercial oil shale development, and where will that water come from? This is an important and key question in both Colorado and Utah, where commercial oil shale development would have major impacts on agricultural and other uses.
Third, how much power would be required for commercial oil shale development? A RAND study suggests that to produce 100,000 barrels a day would require approximately 1.2 gigawatts of dedicated electric generating capacity, the equivalent of over 5 coal fired power plants.
Fourth, what are the impacts of commercial oil shale development on our land, water, wildlife, and communities?
We don’t yet have the answers to these questions at this point in time.
That is why it was premature for the last Administration to issue final commercial oil shale regulations. Among other things, those regulations locked in low royalty rates based on speculative information. The 5% royalty rate – which they wanted to apply to their second round of Research and Development leases as well – sells taxpayers short.
If oil shale technology proves to be viable on a commercial scale, taxpayers should get a fair rate of return from their resource.
We are still evaluating our options on the commercial regulations that the previous Administration finalized for commercial oil shale development, but we are committed to moving ahead with research and development to explore the possibilities of oil shale
This has been a Podcast from the United States Department of the Interior Radio News Service, I’m Ron Tull, Washington.