Times follows e-mail trail in 11th-hour oil shale leasing probe of Norton

The Los Angeles Times continues to follow the e-mail trail in the 11th-hour Bush administration bid to lock in low royalty rates for highly speculative, as-yet-unproven oil shale production in the Green River Formation of northwest Colorado, eastern Utah and southwest Wyoming.

Experts estimate up to one trillion barrels of oil could be squeezed from the shale rock and sands, but the process consumes huge amounts of water and carries with it potentially devastating environmental impacts.

On its way out the door last fall, the Bush Interior Department tried to lock in rules that would require oil shale royalty rates for production on public lands starting at about 5 percent – far below traditional oil and gas royalty rates because of the speculative nature of the resource.

In its ongoing investigation of former Bush Interior Secretary Gale Norton, who later signed on as an attorney with Dutch Royal Shell – one of the leading researchers of oil shale production in Colorado – the Times turned up e-mails where Norton tips her hand on the strategy she suggested for locking in royalty rates despite changing administrations.

Norton, who’s being probed by the Obama Justice Department for allegedly using her Interior post to secure a job at Shell, said she thought Obama Interior Secretary Ken Salazar might be more inclined to defend the Bush rates because of legal challenges from environmental groups.

But a Shell official questioned that approach because it could seem as if they were admitting the 11th-hour process was flawed and because the rates were too low.

Oil shale production involves either mining shale and super-heating it to force out the kerogen, or organic matter, in order to refine it into petroleum; or heating the shale underground in what’s known as in-situ production. Both methods require huge amounts of water and electricity, and environmentalists argue research and development funds would be better spent on renewables.

Another speculative source of future energy – shale gas – was debunked by an expert this week at the Association for the Study of Peak Oil and Gas conference in Denver. Arthur Berman, a geological consultant from Texas, said shale gas plays may not be nearly as promising as some proponents claim, and that speculation on the resource may be the next energy bubble to burst.

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