November 23, 2011
As part of the national Republican agenda to create jobs and stir the economy, Congressman Doug Lamborn introduced a bill on Nov. 14 to open up more Western land for oil shale development. But critics say oil shale is miles away from being useful as an energy source, and that the bill is a calculated political move.
Oil shale is a natural resource found in abundance throughout the West, equaling as much as 2 trillion barrels of oil, according to the Bureau of Land Management.
But research into oil shale development has lagged because the cost-to-profit ratio has never provided a consistent payoff for energy companies. In 1982, Western Slope communities lost thousands of jobs on “Black Sunday,” when ExxonMobil pulled out of a nearby oil shale project after the price of oil dropped.
No energy company is yet producing oil shale commercially, but research has continued, and Lamborn’s bill — which he calls the PIONEERS Act — is designed to accelerate development. No oil shale is found in Lamborn’s Congressional District 5 or anywhere near El Paso County. All of the oil shale in Colorado is on the Western Slope.
The PIONEERS Act has even been promoted by House Speaker John Boehner, R-Ohio, as part of an energy jobs package.
The bill would require the BLM to sell 10 more parcels of public land six months after the bill would take effect, sell off at least 125,000 acres of public land for commercial development by 2016, and allow the BLM to reduce royalties and other fees for energy companies, as an incentive for them to spend more on development. Parcel sizes vary.
“There’s a huge potential for new energy coming out of the oil shale formations in Colorado,” said Lamborn. “Energy companies all think it’s worth committing hundreds of millions of dollars to research and development, so why not let them experiment?”
Environmentalists contend that Lamborn is misleading the public, and that only a small number of jobs will be created through oil shale for at least a decade.
“Mr. Lamborn is just barking up the wrong tree, because there aren’t any companies that are even remotely prepared to develop this commercially,” said Boulder-based Western Resource Advocates advisor David Abelson. “What he’s really trying to do is score political points.”
Lamborn agreed that oil shale technology won’t be ready for prime time for at least a decade, but said some jobs will be created immediately by boosting research projects.
The main problem is that the technology to develop oil shale hasn’t produced a cost-effective means of extraction, according to a memo from ExxonMobil, which owns more than 50,000 acres of land in western Colorado.
“Many years of research and development will be required to demonstrate the technical, environmental, and economic feasibility of (oil shale) technology,” the memo reads, in a description of its Electrofrac project.
The memo says Electrofrac is ExxonMobil’s “leading candidate” for oil shale conversion technology, and says it “has the potential to provide cost-effective recovery.” Electrofrac, like other oil shale extraction methods, uses heat and electricity to convert the shale into fuel.
Shell spokeswoman Carolyn Tucker echoed the ExxonMobil memo, and wrote in an email to The Gazette that though oil shale development “works technically on a small scale, what remains is to prove it can work commercially.”
The bill’s critics say that reinforces what they’ve been arguing — there still isn’t any real promise for oil shale.
Oil shale development may also be dangerous to water sources, according to a report from the Government Accountability Office. So Secretary of the Interior Ken Salazar announced in February that he’s pushing back the date for regulations to be finished, to November 2012.
BLM Director Bob Abbey said at the time that his agency is “supportive” of oil shale development.
Lamborn’s bill would override Salazar’s decision, and force the BLM to start selling off land much sooner.
Yet another problem is that the PIONEERS Act would also shrink income to many local governments, Abelson said, because it lowers royalty rates on energy companies that otherwise go to the state.
Lamborn, however, said the bill would reduce royalties only on federal land that winds up producing oil shale, and so wouldn’t cost local governments a dime.
Oil shale is found only in Colorado, Wyoming and Utah, and it’s spread out over 10 million acres. So far, the BLM has made 2 million acres of that available for commercial oil shale development, and in Colorado, 800 acres have been leased.
Three oil companies — Shell, Chevron and EGL Resources, Inc. — claimed the leases. In Utah, one lease was issued to the Oil Shale Exploration Co.
All of those were issued in 2007, and the companies have 10 years to demonstrate to the BLM that oil shale is commercially viable. So far, none has done so, according to BLM Project Manager Sharri Thompson, but all are still in the research stage.
Contact John Schroyer: 476-4825
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