SALT LAKE CITY -- Interior Secretary Ken Salazar called Tuesday for an investigation into last-minute changes made by the administration of President George Bush to favor oil companies in oil-shale leasing.
Salazar said the Bush administration locked in a bargain royalty rate on 30,000 acres of land for oil companies without any opportunity for review or comment.
"There are questions about whether the lease addendums are legal or should be rescinded," he said in a teleconference call with reporters.
Salazar, however, said that before he reversed any of the Bush administration's changes, he wants his department's inspector general, Mary Kendall, to determine how the regulations were changed.
The Department of Justice already has launched a probe into whether former Interior Secretary Gale A. Norton used her position to steer three of the six potentially lucrative oil leases to Royal Dutch Shell PLC, the company she works for now.
Salazar said Kendall's probe would be a separate matter.
In addition, Salazar said he was opening a second, more environmentally sensitive round of oil-shale leasing for Colorado, Utah and Wyoming.
The Interior Department is offering smaller research-and-development leases with requirements for environmental safeguards and milestones for progress.
With the announcements, Salazar is taking a more cautious approach to oil-shale development, which could require enormous amounts of water and electric power in states with little of either.
Moreover, he said oil companies will have to meet a series of development benchmarks for their leases "so they just aren't held out there forever," Salazar said.
A trade group was unhappy that Salazar was reducing the size of development leases to a square-mile from eight times that size.
"Slashing the size of the potential commercial lease diminishes the incentives for investment and ignores the enormous upfront costs and risks undertaken to develop these technologically complex resources," The American Petroleum Institute said in a statement.
The industry defends the 5 percent production royalty fixed by the Bush administration in the first set of leases. Soon after he took office, Salazar said the rate sells taxpayers short because rates for conventional oil and gas production on public land range up to 18.8 percent.
Government and industry officials estimate as many as 800 billion barrels of oil -- enough to displace oil imports for 100 years -- is locked in sedimentary rock in parts of Colorado, Utah and Wyoming.
No company has conclusively shown an economical way of extracting the waxy petroleum, called kerogen, on a large scale.
Shell Exploration & Production Co., a major player with three research and development leases in Colorado picked up years ago, had no immediate reaction to Salazar's announcement.
Posted in Local on Tuesday, October 20, 2009 1:55 pm | Tags: Salt Lake City, Interior Secretary, Ken Salazar, George W. Bush, Oil-shale Leasing
© Copyright 2010, trib.com, Casper, WY | Terms of Service and Privacy Policy