Salazar Reforms U.S. Oil Shale Program
Pledging to reform the nation’s oil shale program, Secretary of the Interior Ken Salazar announced in a teleconference with reporters today that the Department of the Interior is offering additional opportunities for energy companies to conduct oil shale research, development and demonstration (RD&D) projects on public lands in Colorado, Utah, and Wyoming. In addition, Salazar has asked the Department’s Inspector General to investigate a set of lease addenda that the previous administration entered into with the holders of six existing RD&D leases on January 15, 2009.
Topic: Secretary Salazar announced a new round of leases for oil shale research, development and demonstration.
“Today I am announcing that we will be issuing additional research, development and demonstration leases. Energy companies will have 60 days to submit applications for 160 acre leases for research and development. If the lessees demonstrate the ability to produce oil equivalent derived from shale, up to 480 additional contiguous acres would be added to the lease for commercial scale development.”
Topic: Secretary Salazar says there are still key questions that must be answered before Interior can endorse full-scale development of oil shale.
“First, are the technologies under development viable on a commercial scale as they move forward from experimental research and development to looking at the possibility of commercial development. Second, how water would be required for commercial oil shale development and where would it come from. This is an obviously important question in Colorado and Utah which are arid states with limited water supply, where commercial oil shale development would have major impacts on agriculture and other uses. Third, how much power would be required for commercial oil shale development, how many gigiwatts of electric generating capacity would be needed to melt the kerogen from the shale where we now find the existence of the kerogen. And fourth, what are the impacts of commercial oil shale development on our land, water, wildlife, climate and communities. These are central questions to which answers are needed before we plunge forward in the full-scale endorsement of any commercial oil shale development.”
Topic: Secretary Salazar more leases will lead to honest answers on oil shale.
“That’s why it is so essential for us in our reform agenda as we look to developing a comprehensive energy plan, that we have honest straightforward answers to these central questions. Because oil shale, in order for it to be a part of our long-term comprehensive energy plan, needs to … we need to have an honest evaluation about it’s potential and research and development leases will allow us to get those answers.”
Topic: Secretary Salazar has asked the department's Inspector General to look into lease deal made on January 15, 2009.
“There are serious questions about whether those lease addenda in fact are legal or whether or not they should be rescinded. I have decided that before taking final action on those lease addenda that it’s important for me as Secretary of Interior to get to the facts about the circumstances surrounding the issuance of those lease addenda. The Inspector General of the department is in a position where they can do an appropriate investigation and get us to the facts.”
Topic: Secretary Salazar says establishing that establishing a royalty rate before oil shale is proven commercially viable is premature.
“I said then and I still will say today that I think there is a question about how those royalty rates could actually be set when these very important fundamental questions have not yet been answered. My view, the appropriate time to set the long-term royalties with respect to commercial oil shale development is when we know what kind of technology is going to be used and we have the answers to these fundamental questions that we have been talking about. And so we’ll move forward and address the question about the long-term commercial oil shale regulations and the appropriate royalty rate on down the road.”
Topic: The second round of RD&D leases will include several reforms.
“The second round of research and development leases include our substantive components of reform with respect to research and development and they are different from what they were in the first. We have included here for example; diligence milestones for these leases so they just aren’t held out there forever, so the lessees must submit plans of development within nine months. After the BLM approves a plan of development the lessees must acquire the state and local permits within 16 months and there must be quarterly reports submitted on progress. So this is a reform effort that is focused in specifically at research and development on oil shale.”