Interior puts brakes on oil-shale leases -- for now

Public lands » But Utah governor is worries move would affect state.
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Making good on a promise he made a week before President Barack Obama took office, Interior Secretary Ken Salazar on Wednesday tossed out a Bush administration move to speed oil-shale development on public land in Utah and Colorado.

During a teleconference, Salazar called the Bush rule one of many flawed last-minute policies "that don't pass the smell test."

Earlier this month, the new Interior boss shelved leases for oil and gas drilling near national parks in Utah.

Wednesday's announcement means any additional research-and-development leases the U.S. Bureau of Management may have offered after mid-January won't go forward.

Under the Bush regulation, the leases would have allowed substantially more acreage and set royalties at 5 percent, a figure Salazar said would sell taxpayers short.

Salazar said a notice in the Federal Register this Friday will ask industry, communities, states and other interested people for their advice on terms and conditions for a second round of oil-shale research, development and demonstration leases. The public will have a 90-day comment period, he added, that "will help us restore order to a process that, under the previous administration, was turned upside down."

Utah Gov. Jon Huntsman Jr., who says he supports oil-shale development that is commercially and environmentally sound, worries about Salazar's latest action.

"The pattern the department is following is concerning," spokeswoman Lisa Roskelley said. "Oil shale is a valuable resource, which is critical for our state and meeting our national energy needs."

Steve Bloch, staff attorney for the Southern Utah Wilderness Alliance, said Salazar's go-slow approach makes sense.

"Shale development in Utah and other states, if it ever happens, will happen in a more thoughtful way than it would under the Bush administration," Bloch said. "We need to know if shale can be developed in a sound and sustainable manner."

Since July, when Interior released its proposed "critical rules of the road" for investors, the Bush team moved quickly to advance oil-shale development -- despite its unproven commercial possibility and uncertainty where the massive amounts of electricity and water would come from during development.

Salazar reiterated that point Wednesday, citing a Rand Corp. study that said it would take about 1.2 gigawatts of electricity to extract the needed kerogen and would require the equivalent of more than five new coal-fired power plants to generate that much.

The BLM has estimated the equivalent of 800 million barrels of petroleum are locked in the shale formation that straddles the Utah-Colorado border near Vernal. But a BLM spokeswoman has acknowledged that figure wasn't based on solid numbers because there was no proven technology that could extract the waxy kerogen, which eventually might be refined into diesel or jet fuel. No refineries accept kerogen.

Last fall, the BLM issued development rules and finalized six management plans for 11 million federal acres in southern and eastern Utah that were amended to conform to the new oil-shale rules. A challenge to those plans from a coalition of conservation and historic-preservation groups remains in federal court.

On Jan. 14, the BLM solicited nominations for a second round of shale research, development and demonstration leases. The agency previously had approved six leases under former rules. One of those parcels is in Utah.

Salazar denied his move ignores the desire for energy independence. Citing the new Economic Recovery Act, he said the Obama administration would pursue energy efficiency, renewables and new development technologies.

"We recognize that development has to be part of what we need to move forward," he said. However, "those that have fantasized that oil shale is the answer to America's oil needs are living in a fantasy world."

Salazar's move sparks mixed reactions

Rep. Rob Bishop, R-Utah, chairman of the Congressional Western Caucus, criticized the oil-shale announcement.

"Secretary [Ken] Salazar seems to be under the impression that Americans don't need or want to develop our nation's vast oil and gas resources. He's wrong," Bishop said. "Shutting off domestic exploration and production is shortsighted and unwise."

But Bobby McEnaney, lands advocate for the Natural Resources Defense Council, said Salazar's move shows his commitment to change within the Interior Department.

"Instead of throwing money into unproven fuel projects that would devastate the land and endanger public health," he said, "this administration is making smart decisions by investing in clean energy that will create jobs and reduce our dependence on oil."

Patty Henetz