February 16, 2011
On February 15, 2011 Department of Interior Secretary Ken Salazar announced that the Department will rethink oil shale policy which includes reassessing the 2008 BLM commercial leasing regulations. BLM intends to update, if necessary, to reflect the latest research. BLM Directory Bob Abbey stated, "We're not sure that 2 million acres should be allocated." This acreage is in Colorado's Piceance Basin which is experiencing extensive gas leasing. Utah and Wyoming are the other states included in the allocation. BLM will consider whether existing resource management plans should be amended. It also will seek public input on various issues including royalty rates "to ensure a fair return to taxpayers." The 2008 regulations set the royalty rate at 5 percent for the first 5 years of commercial production; the rate would rise 1 percent every subsequent year until reacing 12.5 percent. Currently, there are five first round research, demonstration and development (RD&D) oil shale leases in the Piceance. Nominations for three round 2 RD&D leases in Colorado are undergoing the 4-18 month BLM legal process. Secretary Salazar noted, "It is important to place this in the context of very tough water issues faced by the 7 states" in the Colorado River Compact. He emphasized that we need to understand how development of a water-intensive resource will impact allocations under the Compact. There have not been public findings by the lessees in the first round of RD&D as to technological feasibility of commercial scale production or water requirement estimates.
CWF applauds Secretary Salazar's announcement. In our view, it is unnecessary to rush to commercial leasing when no research results have yet been forthcoming on the existing round 1 RD&D oil shale leases in the Piceance Basin. We understand that additional leases exist on private lands in the area.