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Crude from shale will take time

Process to get BLM approval for drilling, mining is extensive

Published: Thursday, Oct. 2 2008 12:18 a.m. MDT

After a critical vote in the House last week, the moratorium on developing oil shale on public lands in Utah, Wyoming and Colorado was allowed to officially expire Wednesday.

But don't expect actual crude any time soon. And do expect continued skepticism from opponents of oil-shale development.

What the end of the ban this week does do is pave the way for the Bureau of Land Management in Utah and neighboring states to work out leases with private entities interested in going after oil locked in shale on federally managed land in the West.

The BLM, however, must first work toward finalizing regulations on exactly how to handle oil-shale leasing and even the BLM in Utah isn't clear on when those rules will be finalized, providing what the BLM called a "thoughtful, phased approach to oil-shale development on public lands."

On Wednesday, the Wilderness Society issued a statement saying people should not get their hopes up on the anticipated lower gas prices that oil-shale advocates say will come as a result of going after an estimated 800 billion recoverable barrels of black gold in the so-called Green River Formation that spans three states.

The Wilderness Society and similar-minded groups, along with the BLM, has been and will be looking closely at whether the technology even exists today — or will sometime soon — to begin the kind of shale development that could possibly yield lower fuel prices at the pump.

But first things first.

The approval process is extensive just to get to a point where drilling or mining can begin, according to BLM spokeswoman Megan Crandall.

A company first has to nominate a piece of federal property for oil and gas exploration. The BLM in Utah will look at whether the land here is available for so-called surface occupancy. If not, only directional drilling would be allowed on the property.

"Each parcel is different," Crandall said Wednesday. Sometimes, she added, parcels simply aren't available for lease.

Eventually the BLM will release a list, or bundle, of parcels being considered and the public will have a chance to protest proposals to lease those parcels for oil-shale development. Any protests would need to be resolved before being included in one of the BLM's quarterly oil and gas lease sales, during which companies bid on the parcels in an auction.

Once a company has the parcels they want, they will need to file an application to drill, which requires another approval process. And in some cases that approval process might require "extensive" environmental analysis.

With oil shale, Crandall noted, the game changes a little because of a need for the BLM to consider the methods companies will be using to actually turn the kerogen they get from the ground into a usable product. Right now, she added, the BLM isn't aware of a viable technology to produce crude from shale on a commercial scale.

Crandall said a commercial development program for shale "will not actually begin until it is technologically viable."

The BLM did issue research and development leases for a shale project in Utah and five others in Colorado, but prior to issuing a lease for commercial production for those sites, companies will still need to jump through federal hoops.

So, how far off is actual oil-shale development on a large scale in Utah, Colorado and Wyoming?

"There's absolutely no way I could even hazard a guess," Crandall said. "There's so many bits and pieces involved, not the least of which is developing the technology. I can tell you unequivocally it is in the future. That much I can tell you — and by that I don't mean next month."

Many conservationists and opponents believe that commercial-scale development of oil shale is still years or decades away while some in the industry have said the technology is already available for bringing to market oil from shale.

"Don't hold your breath waiting for oil to start flowing," said Chase Huntley, energy policy adviser for the Wilderness Society. "However, you should prepare for egregiously deficient rules to be finalized for a publicly owned resource whose value in the long term could extend into the trillions of dollars."


E-mail: sspeckman@desnews.com

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