New BLM oil shale regs draw fire from Salazar, environmental groups

As predicted by environmental groups in a Colorado Independent story last month, new federal regulations dictating government royalties for oil shale production on public lands in Colorado, Wyoming and Utah fall far short of fair compensation, numerous critics said Monday.

According to The Grand Junction Sentinel, the royalty rate is 5 percent for the first five years of commercial production, rising 1 percent a year after that to a maximum of 12.5 percent. The feds get 51 percent of that money, with impacted states reaping 49 percent.

Sen. Ken Salazar, D-Colo., who previously imposed a one-year ban on commercial leasing (the ban expired in September), quickly issued a statement saying the new regs, put out by the Bureau of Land Management Monday, “sell Colorado short.”

A coalition of environmental groups has criticized the lifting of the leasing ban as a federal land grab by the oil industry, which has yet to even come up with a commercially viable technology for extracting oil from loose shale rock and sand. They also argue the current technology requires far too much water than is currently available and is highly destructive to the landscape.

Oil industry officials have countered that the technology is getting better every year and that a ban on leasing removes their incentive for research and development. Newly elected Sen. Mark Udall, D-Colo., told The Colorado Independent in October that he would pursue reinstating the ban once in office. He said it was a blatant attempt to rush through regs by the lame-duck Bush administration.

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