Colorado is urging the federal government to move cautiously in future oil shale leasing, keeping tracts small in size and number until the technology, viability and local impacts of possible production are better defined.
It’s a wise approach that will protect Colorado’s interests — as well as those of the nation — as this developing industry continues to take shape.
Oil shale development could be important to this country’s efforts to wean itself off foreign oil. But it must be done right, protecting Colorado’s natural resources while also benefitting the state financially.
In February, the Department of the Interior scrapped the Bush administration’s last-minute lease offerings for oil shale development in Colorado, Utah and Wyoming. At the time, the leases were criticized as being too large and offered at fire sale terms. Interior Secretary Ken Salazar said it didn’t pass the “smell test” and government would offer “new and fair” lease terms after seeking public input.
Several top Colorado government officials sent a letter this week intended to answer that call for public comment. It thoughtfully outlines the pertinent topics and reasons for proceeding cautiously in issuing any more oil shale leases.
As they rightly noted, oil shale development is of particular interest for Colorado because of the vast resources in the northwest part of the state, which are among the richest in the world. Prudent oil shale development would benefit not only Colorado, but has the potential to improve the nation’s energy security.
Fair royalty rates, however, are important so the country doesn’t give away a potential revenue source.
The state is urging the federal government to ensure that oil shale leasing does not adversely impact the environment or communities in northwest Colorado. Any future oil shale activity ought to be planned in a cluster, wherever possible, so operations don’t sprawl across the landscape.
Furthermore, companies seeking research and development leases should be able to convince the government that they have viable technology to advance oil shale development. Other questions should be answered as well, including estimates of water demands, energy requirements and effects on surface and ground water resources.
In turn, though, they should be given some assurance that the leases will be available when it’s financially feasible to extract the oil.
Currently, Colorado has five federal oil shale research and development leases that cover 800 acres. The shale on those plots alone contain many billions of barrels of oil. Colorado officials suggest those operations be assessed before moving forward.
The state is likely to find a sympathetic ear at the Department of Interior, led by Salazar, Colorado’s former U.S. senator. We expect the reservations expressed by Colorado officials will be familiar ones to Salazar.
We hope Salazar will continue to take a steady and cautious approach on oil shale leasing not only for the good of Colorado, but for the nation as a whole.
