BLM airs oil-shale 'rules'

Since 2006 there have been five test projects going on in Colorado and one in Utah that include drawing oil from shale while it's in the ground without removing ore, and, in Utah, mining ore, crushing it, then heating it to extract the oil.

"They are designed for specific kinds of deposits," Allred said. One method of extraction, he noted, might not work where others will.

Once commercial development actually begins and infrastructure is needed to get things going, it's not "anticipated" that any federal subsidies will be used to defray startup costs for private industries.

Even before the phone conference with Kempthorne, several environmental and conservation groups issued a statement saying the Interior Secretary's announcement gives a "false impression" that oil shale offers hope of lowering the price of gas, at least any time soon. Those groups say the industry is still years away from having technologies that offer the technical, economic and environmental viability to get oil from shale.

"Instead of gambling our resources on unproven fuel sources, such as oil shale, we should invest in proven options that will reduce prices such as higher fuel economy standards, energy efficiency and renewable generation technologies," said Chase Huntley, energy policy adviser for The Wilderness Society.

Also on Tuesday in its draft rules, the Interior Department proposed lowering the royalty rates for the extraction of oil from shale on 2 million acres of public property in Colorado, Utah and Wyoming.

Those rates would be less — for a time — than what the government collects from companies producing oil on other federal lands, including off-shore in the Gulf of Mexico and Alaska.

"It is basically recognition that in the beginning there has to be a lower royalty to recognize the pioneering nature of this business," said Glenn Vawter, executive director of the National Oil Shale Association.

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Contributing: Associated Press

E-mail: sspeckman@desnews.com