WASHINGTON, DC, November 18, 2008 (ENS) – The Bush administration finalized regulations to govern the commercial development of oil shale on federal lands on Monday, rebuffing concerns that the rules are premature and ignoring the serious environmental concerns about tapping the resource.

Administration officials said investors keen to unlock the nation’s vast oil shale resources need “rules of the road” even though the technology is still not commercially viable.

The rules, announced by the U.S. Interior Department’s Bureau of Land Management, provide the regulatory framework for commercial oil shale development, including royalty rates and lease sizes.

The regulations are largely aimed at some two million acres of federal land in Colorado, Utah and Wyoming rich in oil shale – an area known as the Green River formation. The BLM estimates the nation’s oil shale reserves, much of them in the Green River Formation, could yield some 800 billion barrels of recoverable oil.

Group stands at the base of the Green River
Formation in Utah. (Photo courtesy Utah
Geological Survey)

That is enough to displace foreign oil imports for more than a century, said Stephen Allred, the Interior Department’s assistant secretary for land and minerals management.

“Production from domestic resources makes us more secure and less vulnerable to future energy crises, and increases our security and economic well-being,” Allred said. “The tremendous oil shale resources that we have in the U.S., containing several times the oil reserves of Saudi Arabia, can be a vital component of that secure future.”

But Allred acknowledged commercial technology to economically tap the resource does not exist and could be a decade away from reality.

“It is going to be some time,” Allred told reporters on a telephone briefing.

That is one reason the decision to issue the rules has irked environmentalists and some Democratic lawmakers, who also worry about the massive outlays of water and energy needed to convert compounds in sedimentary rocks into synthetic crude oil.

Oil shale specimen from the Uinta Basin,
Utah (Photo courtesy Argonne
National Laboratory)

Oil shale has been labeled the “dirtiest fuel on the planet” by the Natural Resources Defense Council, which estimates that production will emit four times more greenhouse gases than conventional gasoline production.

“Cooking rocks and scorching the Earth is not a solution to our energy crisis,” said Amy Mall, a senior policy analyst for NRDC.

Allred said little about the environmental concerns of oil shale, but said the regulations will help investors and all those who “want to make sure that there is due diligence and that environmental concerns are being considered as those activities go forth,” Allred told reporters.

Leasing is at least five to 10 years away, he added, and several environmental reviews, including a final site-specific analysis, will be required before development is approved.

Allred acknowledged that the BLM lacks the information to project demand for leases or the economics of producing shale oil.

BLM estimates oil shale technologies under development “may be profitable in the neighborhood” of oil prices of $60-$80 a barrel – “more than the current price,” Allred said.

In a bid to further encourage development, the rules offer a bargain on royalties energy companies must pay to lease lands for oil shale development.

Whereas companies developing conventional oil and gas from public lands pay upwards of 12.5 percent in royalties to the federal government, those tapping oil shale will only have to pay five percent during the first five years of production. The rate will then rise one percent every year thereafter until the rate reaches 12.5 percent.

Allred defended the discount, noting that companies are going to spend “hundreds of millions of dollars” to develop oil shale.

Production of oil from tar sands in
Alberta, Canada (Photo courtesy Suncor/ANL)

The royalty rate is “a compromise” that will encourage development and “provide a fair return to the American public,” he said, adding that states from which the oil shale is produced will receive up to 49 percent of the royalties collected.

U.S. Senator Ken Salazar, a Colorado Democrat, called the five percent royalty rate “a pittance.”

He further criticized the rules as hasty, arguing that the BLM has yet to fully analyze the environmental impacts of oil shale production, particularly the effect on scarce water supplies in Colorado and other western states.

“Rather than completing the necessary research and development, the Bush administration is rushing ahead with rules for a development process they know little about,” Salazar said

What impact the rules will ultimately have on U.S. development of oil shale is uncertain. Environmentalists have threatened to sue to repeal an earlier Bush administration decision to open the Green River corridor to oil shale production and there is vocal opposition to oil shale from some Democrats in Congress.

Democrats had previously blocked the Interior Department from issuing oil shale rules, calling for more analysis of the environmental impacts. That ban expired in September, as lawmakers reacted to growing public pressure over high energy costs.

President-elect Barack Obama has previously suggested more research is needed to understand the costs and benefits of oil shale development, but has said little else on the issue.

By J.R. Pegg

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SACRAMENTO, California, September 23, 2008 (ENS) – The Western Climate Initiative governments today announced the design of their new regional market-based cap-and-trade program. The emissions trading program is intended to reduce climate-changing greenhouse gas emissions by 15 percent below 2005 levels by 2020.

The program recommendations met with support from environmental groups and criticism from the coal industry.

The WCI partners say the program is expected to encourage growth in new green technologies, help build a strong clean energy economy, and reduce dependence on foreign oil.

The cap-and-trade program is one element of a regional effort by the governors and premiers of U.S. states and Canadian provinces to promote environmental sustainability and economic growth by reducing greenhouse gas emissions

The partner governments include seven U.S. states: Arizona, California, Montana, New Mexico, Oregon, Quebec, Utah, and Washington; and four Canadian provinces: British Columbia and Manitoba in the west, and Ontario and Quebec in the east.

Together, the seven states and four provinces represent over 70 percent of the Canadian economy and 20 percent of the U.S. economy.

The carbon reduction strategy will cover nearly 90 percent of the region’s emissions, including those from electricity, industry, transportation, and residential and commercial fuel use.

The coal-fired Hunter power plant in Utah
emits greenhouse gases into the
atmosphere. (Photo by Utah
Geological Survey)

The cap-and-trade program will require emitters to cut their pollution by setting a limit, or cap, on emissions and then allowing the market to identify the least costly ways to achieve the limit.

Through collaboration and consultation with stakeholders, the partner governments decided to recommend reducing air pollutants, diversifying energy sources, and advancing economic, environmental, and public health objectives while avoiding localized or disproportionate environmental or economic impacts.

The Western Climate Initiative partner governments have agreed to begin reporting emissions in 2011 for emissions that occur in 2010.

The first phase of the cap-and-trade program will begin on January 1, 2012, with a three-year compliance period.

The second phase will begin in 2015, when the program is expanded to include transportation fuels and residential, commercial and industrial fuels not already covered in the first phase.

“This landmark action by a diverse coalition of Democratic and Republican governors as well as Canadian premiers is a powerful signal to the world that now is the time for dramatic action to stem global warming,” said Derek Walker, director of the California Climate Initiative at Environmental Defense Fund. “This bold leadership will strengthen California’s economy and make the region a hub of clean technology and green job growth.”

Ontario’s coal-fired Lambton power plant
(Photo courtesy Ontario Power Generation)

Other environmentalists were pleased, but warned that many details have yet to be worked out, including whether emissions allowances are given to polluters for free, or whether they are auctioned off with the revenues spent in the public interest.

The agreement unveiled today requires that, at least, 25 percent of the allowances be auctioned by 2020 and encourages states to go further.

“The smartest, cheapest way to tackle global warming is to make companies pay for every ton of pollution and use the revenue to ease the transition to a clean energy economy,” said Jeremiah Baumann, an advocate for Environment Oregon.

“This will prevent windfall profits, save consumers money and accelerate the transition to a clean energy economy,” he said. “We look forward to working with state officials to pursue that goal.”

The American Coalition for Clean Coal Electricity, an industry association, today expressed concern about the regional nature of the Western Climate Initiative cap-and-trade program.

“By focusing on such programs, there is a strong chance the state and/or regional mandates will conflict with future federal mandates, in essence double taxing states where local mandates reside. This would result in increased economic hardship for working families and businesses in WCI states,” said the coalition.

“There are better ways states and regions can continue environmental progress and address climate change concerns without harming the economy,” the coalition stated.

“Such strategies include increasing energy efficiency programs and funding advanced clean coal technology that can achieve real and measurable reductions in greenhouse gas emissions without putting western states’ economies at risk.”

The coalition supports “the timely adoption of a mandatory federal program to reduce greenhouse gas emissions.”

The coal coalition says that investments in technology are “the only way to ensure that mandatory emissions reduction programs do not come at the expense of reducing energy security or making residential and business customers to pay unnecessarily higher costs for energy.”

To read the Western Climate Initiative emissions trading recommendations, click here [www.westernclimateinitiative.org].

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