BLM Announces First Cut on Oil Shale RD&D Proposals
18 January 2006
|Location of the Green River formation and main basins. Click to enlarge.|
The Bureau of Land Management (BLM) announced that eight proposals for oil-shale research development and demonstration (RD&D) leases filed by six companies have been deemed eligible for continued consideration.
The eight proposals were among 20 nominations the BLM received in response to a call for proposals for 160-acre RD&D leases on public lands in Colorado, Utah, and Wyoming. Those nominations were evaluated by an interdisciplinary team of representatives from the BLM, the Departments of Energy and Defense, and the governments of the three States.
The companies that filed the eight applications are:
- Chevron Shale Oil Company;
- EGL Resources, Inc.;
- Exxon Mobil Corporation;
- Oil-Tech, Inc.;
- Oil Shale Exploration, LLC;
- Shell Frontier Oil & Gas, with three separate applications.
The next step in the evaluation process will be to complete an environmental analysis under the National Environmental Policy Act (NEPA) of the eight proposals.
Each of these proposals shows potential for advancing knowledge of oil shale recovery technology, evidence of economic viability, and adequate means for managing the environmental impact of oil shale development.—BLM Director Kathleen Clarke
The parcels nominated by Chevron, EGL, Exxon Mobil, and Shell are located on public lands in Colorado. The proposals submitted by Oil-Tech and Oil Shale Exploration, LLC involve parcels in Utah. Each nomination identifies the 160 acres allowed in the call for RD&D proposals, along with an additional contiguous area of 4,960 acres to be reserved for a preferential right to convert to a commercial lease at a future time after additional BLM review.
Six of the proposals involve in-situ retorting, which does not permanently alter the land surface as does the mining method. All current methods for processing oil shale require heating the rock to mimic the geologic processes that produced conventional deposits of oil and natural gas. NEPA analysis will help the BLM determine whether current technologies will result in less surface disturbance than earlier methods.
The United States holds significant oil shale resources underlying a total area of 16,000 square miles. This represents the largest known concentration of oil shale in the world. More than 70% of American oil shale is on Federal land, primarily in Colorado, Utah, and Wyoming.
A report from RAND in 2005 derived an upper bound of 1.1 trillion barrels of oil recoverable from oil shale, and a lower bound of about 500 billion barrels. The analysts opted for a midpoint—800 billion barrels—in assessing the potentially recoverable oil.
The analysts estimate that under high growth assumptions, an oil shale production level of 1 million barrels per day is probably more than 20 years in the future, and 3 million barrels per day is probably more than 30 years into the future.
The RAND report, Oil Shale Development in the United States, also notes:
Developing a quantitative estimate of these benefits [of oil shale production] is difficult, requiring assumptions far into the future regarding OPEC production and pricing behavior, the demand and price for crude oil, the costs of producing shale oil, and the nature of investments that would be taken in the absence of a domestic oil shale option.
If low-cost shale oil production methods can be realized, direct economic profits in the $20 billion per year range are possible for an oil shale industry producing 3 million barrels per day...While it is difficult to predict the employment gain, it is possible to estimate that a few hundred thousand jobs will be associated, directly and indirectly, with a 3 million barrel per day industry. The net effect on nationwide employment is uncertain, however...
In deciding to provide access to federally owned lands bearing oil shale, these are the benefits that will eventually accrue from full-scale development and which offset costs associated with land use and adverse environmental impacts that cannot be mitigated.
It is relevant to note that a portion of the benefits—namely, those economic and national security benefits associated with lower oil prices—would occur whether the additional production occurs within the United States or in some other country that is not a member of or colluding with OPEC.
The BLM has also initiated a programmatic Environmental Impact Statement (PEIS) to support development of commercial oil shale and tar sands leasing on public lands, as the Energy Policy Act of 2005 requires. (Earlier post.)
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