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April 05, 2013
Less public land for oil sands

In a record of decision (ROD), the Department of Interior’s Bureau of Land Management (BLM) reduced by more than half the public lands previously available in Colorado, Utah, and Wyoming for potential development of oil sands and tar sands resources.  The ROD also specifies that the BLM will accept applications to develop the resources only when energy companies demonstrate that they possess a commercially viable approach to do so. 

The ROD provides that the areas allocated as open for future oil shale leasing are, at this time, open only to research, development, and demonstration (RD&D) leases. In addition, the ROD indicates that once an application for development is accepted, a lease will not be granted until project-specific development plans clear additional analyses of site-specific environmental, social, and economic effects, as required by the National Environmental Policy Act (NEPA). 

In a related action, the BLM is proposing to amend how royalty rates are calculated for leases of public land specified in the ROD. 

Oil in sediments

In the United States, oil sands and tar sands are locked in sedimentary rocks in the 16,000 square mile Green River formation in Colorado, Utah, and Wyoming.  Industry has asserted that petroleum can be commercially developed through use of extraction and surface heating and/or by first heating the rock underground.  The BLM, which oversees commercial development of energy resources on public lands, says that while it recognizes that Congress has indicated its intent that these resources be developed, NEPA and other federal laws require that R&D and leasing decisions be made with full consideration of environmental, cultural, and economic factors.

Overall, the ROD makes nearly 678,000 acres available for potential development of oil shale and 132,000 acres available for development of tar sands.  But the action excludes about 1.34 million acres of planning area in Colorado, Utah, and Wyoming from oil shale leasing and development and more than 300,000 acres in Utah from tar sands leasing and development. 

Excluded areas

According to the BLM, five categories of land were excluded from development, including all areas the BLM has identified as having wilderness characteristics; core or priority greater sage-grouse habitat, except in Wyoming, which the BLM says has an adequate regulatory mechanism for the conservation of greater sage-grouse; and all areas of critical environmental concern (ACECs) and areas currently under consideration for designation as ACECs.

“This plan maintains a strong focus on research and development to promote new technologies that may eventually lead to safe and responsible commercial development of these domestic energy resources,” said Interior Secretary Ken Salazar.  “It will help ensure that we acquire critically important information about these technologies and their potential effects on the landscape, especially our scarce water resources in the West.” 

That view was not shared by Senator John Barrasso (R-WY).  “Today’s decision to reduce—by about 66 percent—the amount of Federal lands available for oil shale production in Wyoming, Colorado, and Utah will have a direct, negative impact on job growth in the West,” said Barrasso.  “This plan will only lead to more uncertainty and discourage companies from investing in American energy production.”

Royalty proposal

In its proposed royalty rule, the BLM presents several options for amending the current royalty rates for commercial oil shale production.  The BLM says that in particular it will consider whether a single royalty rate or rate structure should be set in advance in regulation to provide greater certainty to potential lessees or whether some administrative flexibility may be retained to make adjustments to royalty terms after more is known about the costs and resource impacts associated with emerging oil shale technologies and whether future applications to lease should include specified resource protection plans.

Click here for BLM’s ROD.

Click here for the royalty proposal.