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Subcommittee Hears Criticism of BLM Oil Shale Impact Review

An environmental impact review on oil shale and tar sand plans in Colorado, Utah and Wyoming initiated earlier this year by the federal Bureau of Land Management (BLM) is an "inefficient and unnecessary" exercise, according to one Shell Exploration and Production (E&P) Co. official.

Reopening BLM's 2008 final programmatic environmental impact statement (PEIS) covering Piceance Basin oil shale could result in lower capital investment, lower domestic oil production and increased oil imports, Dan Whitney, heavy oil development manager for Shell E&P, said during a field hearing of the House Natural Resources Committee's Subcommittee on Energy and Mineral Resources in Grand Junction, CO, Wednesday.

Drilling activity in the Piceance Basin has remained at a rather stable level over the past year, according to NGI's Shale Daily Unconventional Rig Count. Thirty rigs were actively drilling in the play for the week ending Aug. 19, down just one rig from the same week a year ago.

"The existing, fully vetted, comprehensive, 1,800-page PEIS is less than three years old. No substantive new information has emerged that merits this revisit in such a short time. The entire exercise ignores the comprehensive framework of regulatory checks and balances already in place in the form of environmental and other laws, including site-specific NEPA [National Environmental Policy Act] review, that will apply to every future oil shale project under federal jurisdiction," Whitney said.

When it announced the impact review in April, BLM said reopening the PEIS would allow it "to take a fresh look" at what public lands are best suited for oil shale and tar sands development while commercial development of the oil shale is still several years into the future (see Shale Daily, April 14). In play potentially are tens of thousands of acres of public lands in the three states that BLM identified in the 2008 PEIS. It expanded the potentially available acreage for leases to about 1.9 million acres for oil shale and another 431,224 acres from tar sands.

Earlier this year the Interior Department said it would take another pass at the rules set by the Bush administration for extracting shale oil from two million acres of federal land in the three states, with the possibility of cutting the acreage total and raising royalties (see Shale Daily, Feb. 17). The announcement was part of a settlement with environmental groups that had sued to halt the authorization for commercial leasing of the western acreage for shale oil development.

But Shell and other energy companies need a more stable regulatory environment, and "the lack of policy and regulatory consistency from one administration to another" only makes the investment climate more risky, said Whitney. "Given the substantial investments necessary for oil shale pilots, research and commercial facilities, regulatory uncertainty has significant adverse impact on Shell's interests."

Also testifying at the hearing was National Oil Shale Association board member Gary Aho, who told the subcommittee that BLM should make land available for oil shale leasing.

"The federal government through the BLM controls nearly 80% of the oil shale lands, and there is currently no oil shale leasing program, despite the fact that leasing was provided for under the Mineral Leasing Act of 1920," Aho said. "As a nation, we have made a number of efforts to develop oil shale and there have been many successful research programs completed over the past 90 years; however, we seem to lack the national resolve to keep a sustained oil shale program moving forward."

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