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US DOI finalizes plan for oil shale and oil sands research, demonstration and development

Secretary of the Interior Ken Salazar last week announced the Department of the Interior’s final plan for encouraging research, development and demonstration (RD&D) of oil shale and oil sands resources on Bureau of Land Management (BLM) lands in Colorado, Utah and Wyoming. (Earlier post.)

The Record of Decision (ROD) and plan amendments make some 700,000 acres in Colorado, Utah and Wyoming available for potential oil shale leasing and about 130,000 acres available for potential oil sands leasing in Utah. In November 2012, the BLM signed two additional leases for RD&D oil shale proposals to encourage industry to develop and test technologies aimed at developing oil shale resources on a commercial scale.

Under the Record of Decision, the BLM-managed lands will be available for RD&D leases of oil shale resources. Eligible companies could convert to a commercial lease after satisfying the conditions of the RD&D lease and meeting basic due diligence requirements and clean air and water requirements. The plan issued today will amend 10 of the BLM’s land use plans.

The BLM will also begin soliciting public comments on proposed revisions to the commercial oil shale regulations. The proposed revisions are intended to ensure a fair return to the American taxpayer, encourage responsible development of federal oil shale resources, and evaluate necessary safeguards to protect scarce water resources and important wildlife habitat. The BLM is accepting public comments for 60 days following publication in the Federal Register, which is expected this week.

The proposed rule identifies several options for amending the royalty rates for commercial oil shale production. The BLM will consider whether to retain some flexibility to adjust royalty rates when more information is available about costs of production, energy inputs, and impacts associated with various extraction technologies.

The results of ongoing research and development activities combined with administrative flexibility in setting royalty rates will allow BLM to determine whether future applications to lease should include specified resource-protection plans and whether other aspects of the regulations need to be clarified.

Oil shale is a fine-grained sedimentary rock containing kerogen and is distinct from “shale oil.” The largest known domestic oil shale deposits are in a 16,000-square mile area in the Green River formation in Colorado, Utah and Wyoming. Oil shale can be mined and heated to an extremely high temperature (retorting) in aboveground facilities, and the oil can then be separated from the resulting liquid. Oil shale also can be subjected to extreme heat and pressure while in underground formations (in situ retorting) and the resulting liquid pumped to the surface. The final oil shale plan examines surface mining with surface retort, underground mining with surface retort, and in situ retorting technologies.

Oil sands are sedimentary rocks containing a heavy hydrocarbon compound called bitumen, which can be refined into oil. Unlike the oil sands deposits in Canada, oil is not currently produced from oil sands on a commercial scale in the United States. US oil sands are hydrocarbon wet, whereas the Canadian oil sands are water wet, meaning that US oil sands would require different processing techniques. The final oil shale plan evaluates the potential impacts of various extraction methods for oil sands, including surface mining with surface retort, surface mining with solvent extraction, in situ steam injection, and in situ combustion technologies.



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