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BLM Reduces Piceance Acreage Available for Oil Shale, Tar Sands

The Interior Department's Bureau of Land Management (BLM) Friday issued a draft proposal, cutting in half the public lands that could be made available in three western states, and limiting activities to early research and development projects for oil shale and tar sands resources.

In a Draft Programmatic Environmental Impact Statement (PEIS) the preferred alternative would make 461,965 acres (35,308 acres in Colorado; 252,181 acres in Utah; and 174,476 acres in Wyoming) available for research and development of oil shale, and 91,045 acres in eastern Utah available for activities related to tar sands.

The acreage is down considerably from a land allocation plan published by BLM in 2008 that proposed making up to two million acres of public lands available for commercial oil shale leasing in Utah, Colorado and Wyoming and 431,000 acres available for tar sands leasing in Utah. Last year the bureau said it would take "a fresh look" at the earlier proposal.

Oil shale is not the same as shale oil.  Oil shale comes from kerogen-rich rocks closer to the surface than shale oil formations. The rocks have to be heated to extremely high temperatures to convert the kerogen into oil. The economics and environmental concerns of oil shale are considerably different from those of shale oil.

Research and development are the appropriate first steps for public lands in Colorado, Utah and Wyoming that are believed to hold oil shale and tar sands resources, the PEIS said. BLM could issue a commercial lease after a lessee satisfies the conditions of its research, development and demonstration lease and meets all federal regulations for conversion to a commercial lease.

By proposing to initially open the area only to limited research and development projects, the BLM action would "close public lands in western states to oil shale development, effectively limiting access to a region that contains more than 1.5 trillion barrels of recoverable oil, according to the Institute for Energy Research (IER).

"The new rules appear to run counter to President Obama's recent State of the Union address, in which he pledged to 'take every possible action' to increase production on public lands. The damaging effects that these new rules will have on job creation and robust domestic energy development cannot be overstated," said Thomas Pyle, IER president.

BLM Director Bob Abbey said "the preferred alternative continues our commitment to encouraging research, development and demonstration projects so that companies can develop technologies that can lead to economic and commercial viability."

"Because there are still many unanswered questions about the technology, water use and impacts of potential commercial-scale oil shale development, we are proposing a prudent and orderly approach that could facilitate significant improvements to technology needed for commercial-scale activity. If oil shale is to be viable on a commercial scale, we must take a common-sense approach that encourages research and development first."

BLM said the United States Geological Survey has undertaken an analysis of baseline water resources conditions to improve the understanding of groundwater and surface water systems that could be affected by commercial-scale oil shale development.

Publication of the draft PEIS opened a 90-day public review and comment period, which is scheduled to end May 4. While dates have not yet been set, public meetings are due to be held in Rifle, CO; Rock Springs, WY; Salt Lake City; and Vernal, UT. Comments may be submitted on the 2012 Oil Shale & Tar Sands Programmatic EIS website or mailed to Oil Shale and Tar Sands Resources Draft Programmatic EIS, Argonne National Laboratory, 9700 South Cass Avenue -- EVS/240, Argonne, IL 60439.

When it announced the impact review last year, 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, 2011). Such a review covering Piceance Basin oil shale has been called an "inefficient and unnecessary" exercise by an Shell Exploration and Production Co. official (see Shale Daily, Aug. 26, 2011).

Drilling activity in the Piceance Basin has trailed off over the past year, according to NGI's Shale Daily Unconventional Rig Count. Twenty-five rigs were actively drilling in the play for the week ending Feb. 3, down six rigs from the same week a year ago.

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