US Interior secretary scraps oil-shale leasing |

US Interior secretary scraps oil-shale leasing

SALT LAKE CITY In a second reversal of the Bush administration, Interior Secretary Ken Salazar said Wednesday he was scrapping leases for oil-shale development on federal lands in Colorado, Utah and Wyoming.Salazar rescinded a lease offer made last month for research, development and demonstration projects that could have led to oil-shale works on 1.9 million acres in the three states, greatly expanding the program.I am withdrawing that Jan. 14 solicitation because in my view it was a midnight decision, and it was flawed, Salazar told reporters on a teleconference call from Washington, D.C.The previous administration offered RD&D oil-shale leases just days before leaving office, made the parcels four times the size of the current six RD&D leases, and then locked in a low royalty rate and a premature regulatory framework for those leases. The administrations last-minute oil-shale RD&D leases just dont pass the smell test, in my view, and therefore I have set them aside.Salazar said he also was scrapping an initial 5 percent royalty rate on oil-shale production, saying the rate sells taxpayers short. Conventional oil and gas production on public land produces royalties of up to 18.8 percent.Salazars action marked the second time he has reversed an action by the Bush administration. He also halted the leasing of oil and gas drilling parcels near national parks in Utah three weeks ago. Then, as now, he called it an ill-conceived midnight decision by the former administration.Environmental groups hailed the slowdown in oil-shale leasing, saying the technology is unproved. Salazar said unlocking petroleum from hard rock would require an enormous amount of power and water.Salazar said hell consider making some of the land available later for new research projects.The federal government already has leased land in Colorado and Utah but none in Wyoming for small-scale oil-shale works.Shell Exploration & Production Co., which picked up three research and development leases in Colorado years ago, said it wasnt affected by Salazars decision because it wasnt eligible to bid on more federal parcels. Shell is working its own lands in western Colorado, testing a method of baking oil shale in the ground.The whole point of this was to get more entities out there researching technology, said Tracy Boyd, a Shell spokesman in Denver.Shell wont know until the middle of the next decade whether oil-shale development is feasible, he said.

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