GLENWOOD SPRINGS, Colorado " A ban that prohibited the Bureau of Land Management from finalizing commercial oil shale regulations will fade away later this month.
The completion of those regulations, along with an expected record of decision that will open about 360,000 acres in Colorado to possible oil shale development, could open the door to a potential sale of federal oil shale leases in the state. However, BLM officials say that it could be years before any lease sale occurs.
The oil shale ban is not included in a continuing resolution that will fund the government after Sept. 30. That is largely because of White House threats to veto any resolution that included the ban and a moratorium on offshore drilling. A veto of the continuing resolution would lead to a government shutdown.
The continuing resolution is expected to pass Congress largely unchanged, which means the oil shale ban will expire at the end of September.
U.S. Sen. Ken Salazar, D-Colo., along with Rep. Mark Udall, D-Eldorado Springs, and John Salazar, D-Manassa, said in a joint statement that they would "fight to restore an orderly process for oil shale development" when Congress reconvenes in January.
"The White House is evidently willing to go to all extremes to trample the will of Western communities," the three Democrats wrote in a prepared statement. "They were threatening to shutdown the entire federal government " at a moment when our economy is in crisis " over two issues: offshore drilling and oil shale development."
Ken Salazar, who had slipped the oil shale ban into a spending bill passed last year, said on Wednesday that he might propose a requirement that before any leases may be issued there needs to be "quantification" of the water that is going to be used for oil shale development.
"That ought to be made a precondition of any Department of Interior action with respect to the issuance of those leases," Salazar said. "I have lots of ideas with the aim in mind that I will protect Western Colorado against the potential ravages from commercial oil shale development."
U.S. Sen. Wayne Allard said Congress "has realized the error of their ways" by removing the oil shale moratorium.
"It was a mistake to the put the moratorium in last year, it would be a mistake to keep it in this year and this has finally been made clear to the Democrat leadership," he said in a prepared statement.
Colo. Gov. Bill Ritter reacted strongly to what he called the White House's "latest efforts to prematurely move forward with commercial oil-shale development in Colorado."
In a letter to President Bush and U.S. Interior Department Secretary Dirk Kempthorne, Ritter wrote for them to "work with us, not against us, and together we can meet this nation's energy needs and craft a responsible energy future for America."
The BLM issued draft oil shale regulations in July, which recommended a 5 percent royalty rate on oil shale in one proposal, and a rate of 5 to 12.5 percent in another proposal. Another alternative under consideration would place the royalty rate on a sliding scale based on the price of oil and production volume.
The final oil shale lease regulations are expected to be released at the end of this year.
Glenn Vawter, executive director of the National Oil Shale Association, said the removal of the oil shale ban was an important step because there is uncertainty about what the precise royalty figures on oil shale would be and what the front-end bonus payments on any leases might be.
Vawter said the final regulations will help companies make decisions about whether they want to continue spending millions on oil shale research.
"If you knew your research is successful and you wanted to go forward commercially, you could determine the economics and see if it is something you want to continue with," Vawter said. "That is really the motivation behind wanting to see the regulations completed."
Elise Jones, executive director of the Colorado Environmental Coalition, said the removal of the oil shale moratorium was another example of the White House and the "inside the beltway crowd" running roughshod over Colorado.
"We were enormously disappointed that the Bush administration is going to try to ram through regulations on oil shale," said Jones, who also has concerns about oil shale development's possible impacts to water. "It is entirely premature. We don't even know the technologies that will be used to develop it."
Mountain Mayors, a group of mayors for towns along the Colorado River and in the Roaring Fork Valley, released a letter this week saying oil shale should be one component of long-term energy plan, but that such a plan would place "equal, if not more, importance and investment" in the development of renewable energy and energy efficiency.
The mayors of Parachute, Rifle, New Castle, Silt, Glenwood Springs, Basalt, Snowmass Village, Carbondale and Aspen all signed the letter.
The mayors also argue that leasing of any lands for oil shale development should occur after research and development of oil shale extraction technologies is complete and that communities of the Western Slope should "have an ongoing and meaningful role on how and when oil shale is developed."
"The scale of the current oil and gas impacts and the prospect of even greater energy impact through the development of oil shale gives us reason for concern," the mayors wrote.
Potential commercial oil shale development could have enormous impacts on the Piceance Basin " which stretches across Garfield, Rio Blanco and Mesa counties. That's because the basin might have close to 1 trillion barrels of oil, according to a RAND report from 2005.
A recent report released by the Associated Governments of Northwest of Colorado found that commercial production of oil shale is forecast to begin on a small scale in 2021.
"After 2025, about 50,000 barrels per day (bpd) of annual capacity is projected be added each year," the report said, adding all production would take place in Rio Blanco County.
The report said that by 2035 oil shale development will require more than 9,300 direct workers and that an additional 4,500 workers would be "needed to produce additional natural gas, as well as construct and maintain the electrical generation facilities necessary to meet oil shale's energy requirements."
Another 12,000 secondary jobs would be needed to support the oil shale industry on the Western Slope, the report said.
Many other people worry about the environmental impacts that oil shale development could cause. Earlier this year, the EPA expressed concern that the production of oil shale and tar sands may cause "significant, adverse impacts to air quality" and pose a potential danger to groundwater.
Those potential impacts may make it difficult for the EPA to support a "finding of no significant impact" for environmental analyses that the BLM may conduct in connection with its oil shale commercial leasing program.
Oil shale development has already taken a significant toll on communities on the Western Slope. Many area residents vividly recall the consequences of Exxon's move to close its oil shale operation on May 2, 1982 " a day locals know as "Black Sunday."
That action, which came with little warning, sent the area's economy into a tailspin. It took several years for Rifle and the surrounding area to recover from that decision.
Contact Phillip Yates: 384-9117