House boosting oil shale

WASHINGTON — Energy companies could potentially reap millions of dollars in royalty breaks under a House bill approved Thursday that calls for the United States to model its Western oil shale program after Canada's booming tar sands industry.

Companies in Canada are making fortunes turning sticky, tar-covered sand into oil. The United States hopes to do the same with tar sand in Utah and its cousin, oil shale, a rock that yields petroleum when heated.

Colorado, Utah and Wyoming contain an estimated 500 billion to 1.1 trillion recoverable barrels of oil from oil shale, though companies are still exploring whether it can be tapped economically.

The provision in a House energy bill, which also lifts a ban on oil and gas drilling off much of the U.S. coast, directs the interior secretary to use Canada as an example of how to shape the royalties the oil shale companies would pay for energy from public lands.

Canadian tar sands producers pay little in royalties until several years into development.

"There's no need to reinvent the wheel — they've shown they can do it efficiently, fruitfully and safely," said Brian Kennedy, spokesman for House Resources Committee Chairman Richard Pombo, R-Calif., the bill's sponsor.

"That's great news — very, very encouraging," said Romit Bhattacharya, CEO of the Vernal-based Oil Tech.

Bhattacharya's company owns mineral rights on 32,000 acres of state land in Utah and is in the midst of developing a retort, or processing, site capable of producing 1,000 barrels of oil a day from shale mined south of Vernal.

On Thursday Bhattacharya was at a 24-barrel-a-day pilot retort site near Bonanza, Uintah County, showing people from the energy and investment sectors how the processing of shale works. Oil Tech is a private company funded mostly by investors from the East Coast.

Bhattacharya noted his company is not looking for financial handouts from the government. But he would like to see an expedited federal permitting procedure that allows the mining and processing of shale to move forward more quickly, while conforming to environmental standards.

As for a feared boom-bust scenario, such as a big enough dip in oil prices to drive interest away from shale oil, Bhattacharya doesn't see things in those terms.

Unlike the whirlwind romance with shale 30 years ago, today's climate is more shale-friendly with the presence of a global economy and China and India's increasing demand for energy, according to Bhattacharya.