Originally published November 17, 2008 at 1:45 PM | Page modified November 17, 2008 at 2:14 PM
Rules set up for oil-shale extraction on federal land
The Bush administration gave energy companies steep discounts in the royalties they will be required to pay as it established the groundwork Monday for commercial oil shale development on federal land.
Associated Press Writer
The Bush administration gave energy companies steep discounts in the royalties they will be required to pay as it established the groundwork Monday for commercial oil shale development on federal land.
Interior Department officials said the 5 percent royalty rate during the first five years of production was needed to spur drilling while still giving taxpayers a fair return. But that rate is much lower than the 12.5 percent to 18.8 percent the government collects from companies harvesting conventional oil and gas on public lands.
"In the short run, the American economy will continue to rely on oil and that means we need to increase supplies particularly here at home," said Stephen Allred, Assistant Secretary of Land and Minerals Management, during a call with reporters. "Public lands have a significant role to play."
Monday's announcement sets parameters such as the royalty rate and lease sizes, but it will be up to the incoming Obama administration to decide whether to proceed with leasing. Officials on Monday said commercial leasing was five to 10 years away.
The announcement by the Interior Department comes months after Congress - pressured by the White House and Republicans to increase domestic energy - failed to renew a ban on issuing final oil shale regulations.
In September, the Bush administration opened up approximately 1.9 million acres of federal property in Wyoming, Colorado and Utah to potential oil shale development.
Lawmakers from those Western states, which will receive half of the royalties collected, have said it is too early to issue final rules on oil shale development since so little is known about its impacts on the environment and water resources.
"These regulations are premature and flawed," said Sen. Ken Salazar, D-Colo., in a statement. "The Bush administration is rushing ahead with rules for a development process that they know little about,"
But Allred said 'rules of the road' were needed now so companies could plan investments. Leasing would not occur, he said, without further environmental review.
Up to 800 billion barrels of oil - enough to displace oil imports for 100 years, according to the Interior Department - is locked within fine-grained rock known as oil shale. The bulk of the resources are within a 16,000-square-mile area known as the Green River formation in Colorado, Utah and Wyoming.
Energy companies are looking into various ways of extracting the oil economically. Unlike traditional sources of oil, oil shale is costly to produce. Energy is needed to bake the rock and pump the molten oil to the surface. Shale oil can cost about $37.75 to $65.21 a barrel to produce, compared with $19.50 per barrel for conventional crude, according to Interior Department figures.
A government program to subsidize oil shale development in the 1980s was shut down when cost figures came in at several times the then-market price for oil.
![]()
---
On the Net:
Bureau of Land Management: http://www.blm.gov
Copyright © 2008 The Seattle Times Company
UPDATE - 02:06 AM
Sources: Obama near decision on Afghanistan troops
UPDATE - 12:34 AM
Bill Clinton meets with Senate Dems on health care
UPDATE - 02:09 AM
FBI reassessing past look at Fort Hood suspect
McGinn next Seattle mayor; Mallahan concedes as vote gap widens
High court looks at life sentences for juveniles

Ken Auletta talks about "Googled"
Ken Auletta talks about Google with Brier Dudley at the Seattle Central Library.
Follow seattletimes.com on Twitter
Get the top stories on-the-go by following seattletimes.com on Twitter. We'll tweet the news and information you need around the clock and keep you up-to-date no matter where you are. Go to www.twitter.com/seattletimes to sign up now.
nwjobs

Post a comment

Michelle Goodman blogs about work/life balance.
How to tell your office you're gravely ill
Post a comment
nwautos

Choosing a new sedan? Weigh the impact of your choice on your wallet and on the planet.
Post a comment
- 'Missing' SeaTac man found with new name, in new state
- Police: DNA from officer's slaying matches suspect
- Prosecutors consider charges against suspect in police shooting
- Three more fires ignite in Greenwood
- Steve Kelley | Hasselbeck gives Seahawks' sagging season a stay of execution
- Plans call for Triangle to become West Seattle gateway
- Bill Clinton meets with Senate Dems on health care
- Trucker dies as big-rig plummets off SF bridge
- Washington coordinator Nick Holt says his Huskies defense is improving
- McGinn next Seattle mayor; Mallahan concedes as vote gap widens
- Prosecutors prepare charges against suspect in police shooting
253 - House health bill unacceptable to many in Senate
246 - Pelosi tours Seattle's Swedish after health-care vote
167 - Prosecutors prepare charges against suspect in police shooting
142 - Alleged shooter tied to mosque of 9/11 hijackers
135 - Obama puts heat on Senate to speed health bill
123 - Resolute Fort Hood soldiers ready for return
118 - McGinn more than doubles his lead over Mallahan
97 - Cutaia says replay handled properly on Austin TD
69 - Josh Smith picks UCLA
68
- For 80-year-old Maple Valley man, hoops aren't just a dream
- Plans call for Triangle to become West Seattle gateway
- Three more fires ignite in Greenwood
- 'Missing' SeaTac man found with new name, in new state
- Pakistani-American cafe, bar owner on verge of being Granite Falls mayor
- Silver Lake restaurant destroyed by fire
- All You Can Eat | Fruit flies: thrill to the kill
- Police: DNA from officer's slaying matches suspect
- Taste | Ruth Reichl still reigns as queen of America's culinary scene
- Book review | Ayn Rand: goddess of the market, gateway to the American right





