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October 19, 2008 — Even as Republican Utah Gov. Jon Huntsman declared his state “open for business” to the oil-shale industry last week in Golden, Democratic congressman Mark Udall of Colorado vowed to fight the Bush administration’s fast-tracking of commercial leasing in the West.
“We will go back to work and make sure that the interests of Colorado are protected when it comes to oil-shale development,” Udall told RealVail.com. “If we’re going to have a few months here where the Bush administration wants to try and pull another fast one like they’ve done on so many other ways, let them, but in January I believe that Republicans and Democrats will join together to make sure that the oil-shale development is done right.”
Udall, who’s running against former oil and gas executive and Republican congressman Bob Schaffer for Colorado’s open U.S. Senate seat, helped impose a one-year ban on commercial leasing that expired last month. Now Huntsman and other Bush allies want to see royalty regulations written and leases issued by the Bureau of Land Management before a new president and Congress come into power.
Speaking at an oil shale symposium at Colorado School of Mines in Golden last week, Huntsmen lamented the regulatory gridlock on developing the resource, which is trapped in the form of kerogen in rocks and sand spread over parts of Utah, Wyoming and northwestern Colorado.
Mining that rock and extracting and refining oil from it is a process that takes intense temperatures and a great deal of electricity and water. Experts agree that much research and development is needed to make the process commercially viable in the coming decades.
Opponents argue the environmental damage to the landscape, in addition to associated air and water pollution, make large-scale oil-shale production a worst-case scenario for reducing foreign oil dependence, particularly given the amount of time it will take to perfect the process.
“The water, the energy, the landscape degradation that occurs, the [lack of] existing technology,” Udall said. “You have to level [hillsides] like a pool table. We’re going to make all of Northwest Colorado look like one big pool table for hundreds of square miles? I don’t think so.”
Udall has an ally in Colorado Gov. Bill Ritter, a Democrat who wants to slow down the leasing process so the technology can be perfected and the regulations can be more carefully considered. Most of the shale deposits, estimated at 800 billion barrels, are on federal lands.
“If you look at where the oil shale is, that’s not really the heart or thrust of our tourism,” said Utah state Rep. Aaron Tilton, a Republican who’s the vice chairman of a Golden-based, industry-backed nonprofit front organization (Astroturf group) called Americans for American Energy.
“It’s just pretty much desolate lands, so to speak, that can be effectively mined and then reclaimed on a basis that would be consistent environmentally with what the federal government has set and what the state sets and what we value in our resources,” Tilton added.
But environmentalists argue Congress needs to reinstitute the leasing ban next session in order for research and development to catch up and so that better deals can be struck with oil and gas companies. Shale advocates say companies won’t pump money into infrastructure and research until the rules are in place and leases are issued.
Dave Alberswerth, senior energy policy advisor for the Wilderness Society, says Shell Oil is currently sitting on 32,000 acres of formerly public land sold to the company by the BLM under an 1871 mining law. He also said the government has issued five R&D leases in Colorado that so far have failed to produce large-scale, commercially viable technology for extracting oil from shale.
“This resource that [Shell has] has tens of billions of barrels of shale oil equivalent in it. Why haven’t they commercially developed it if this stuff is so great and so ready for production?” Alberswerth said. “Same is true of Exxon/Mobil, they have tens of thousands of acres oil shale resources, and a number of other companies do as well. So there’s no lack of opportunity out there for private industry to develop oil shale on land that it already owns.”
Coloradans may be a bit more gun-shy than their neighbors in Utah because of a massive oil-shale boom in the early 1980s that never produced the promised economic windfall before busting virtually overnight and leaving several Western Slope counties dotted with virtual ghost towns.
“Those resources belong to us,” Udall said, “and that’s the reason we want to make sure a royalty structure returns a fair return to us and this isn’t another opportunity for oil and gas interests to have record profits.”
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