Udall is concerned the current push for oil shale development could mirror the sudden bust when Exxon pulled out of the Colony Shale Oil Project in 1982.
"Let's not produce the mistake that resulted in Black Sunday," Udall told reporters after a House Energy and Mineral Resources Subcommittee hearing yesterday.
At issue is a 2005 Energy Policy Act provision that directs BLM to seek commercial oil shale leases even as the agency issues research and development leases and grants on public lands in Colorado, Utah and Wyoming.
Udall said he would like to see legislation that amends Section 369 of the 2005 energy bill that makes the environmental impact statement (EIS) under the National Environmental Policy Act follow the research and development projects. BLM is currently scheduled to issue a draft programmatic oil shale and tar sands leasing EIS in late summer.
Subcommittee Chairman Jim Costa (D-Calif.) said yesterday's hearing on the oil and gas section of the 2005 energy bill was intended to jump-start discussion about possible legislation but indicated no bills are imminent. "We've taken this opportunity to look at the impact of the 2005 act," he told reporters.
But ranking member Steve Pearce (R-N.M.) says Democrats are aiming to repeal the 2005 law. "I see us on a trajectory that would lead us to conclude the majority wants to repeal the entire Energy Policy Act of 2005," Pearce said.
Natural Resources Committee Chairman Nick Rahall (D-W.Va.) and other key Democrats have expressed concern BLM is focusing too much on energy exploration at the expense of conservation, recreation and wildlife. Next Thursday, the Energy and Parks subcommittees are scheduled to explore land-use issues with oil and gas leasing and development at a joint hearing.
Kathleen Sullivan Kelly, a former Colorado state representative in the 1980s, when oil shale development appeared promising and immediate in Colorado, was skeptical about the new oil shale rush. "Forgive me if I view this latest oil shale rush as overblown hyperbole, with more to do about posturing than production," Kelly said.
"The BLM is misinterpreting the oil shale provisions in the Energy Policy Act in its stampede toward commercial leasing," Kelly added.
James Bartis, senior policy researcher at the RAND Corp. and author of a 2005 oil shale analysis funded by the National Energy Technology Laboratory, said Congress should remove the set timeline for a commercial leasing program. "The fact that industry is years away from establishing commercial viability and environmental performance calls into question the analytic basis of the current, legislatively imposed schedule for establishing regulations for commercial leasing," Bartis said.
Last November, BLM gave final approval to environmental analyses of proposed research, development and demonstration projects in Colorado's Piceance Basin by Chevron USA Inc., EGL Resources Inc. and Shell Frontier Oil & Gas Inc.
The leases are part of BLM's 10-year program to spur development of methods for commercial extraction of the massive resource. The Green River Formation that covers parts of Colorado, Wyoming and Utah holds as many as 800 billion barrels of recoverable shale oil, BLM says (Greenwire, Nov. 14, 2006).
Witnesses also took aim at provisions in the energy bill that provide for categorical exclusions from NEPA studies of oil and gas drilling permits in sensitive wildlife habitats.
The Western Governors' Association recently called on Congress to repeal that section, and Udall said he believes a legislative "fix" is warranted.
Although BLM under the Clinton administration ramped up oil and gas leasing in the West, former BLM Colorado Director Ann Morgan said the agency is not as careful about where development occurs, making full NEPA analysis critical. "We did a lot of oil and gas leasing, but we were very careful about where we did it," Morgan said.
Eliminating the categorical exclusions would require the Interior and Agriculture departments to conduct a full site-specific environmental analysis or EIA, which is "necessary to protect crucial wildlife habitat and significant migration corridors located in the field of development," the WGA resolution states.
Interior Assistant Deputy Secretary Abraham Haspel said there is a "misunderstanding" about what Section 390 and the categorical exclusions allow and do not allow. "What this does is say there has been environmental work done -- use that first. Then perform site-specific analyses," he said.
Industry groups and the Bush administration like categorical exclusions because they technically fulfill NEPA statutory requirements for environmental analysis but can dramatically cut the approval time for projects or permit requests.
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