Bureau of Land Management

Oil Shale Development

Unconventional Fuels Conference

University of Utah

May 17, 2011

Domestic Oil Shale Resources

Primary oil shale resources in the U.S. are in the Green River Formation in Wyoming, Utah, and Colorado.

72 % of this oil shale resource is on Federal lands.

U.S. oil shale resources total 2.6 trillion barrels of oil (> 50% of world resources).

Green River Formation is estimated to contain 75% of total U.S. in-place resources.

Remaining technically recoverable onshore and offshore crude oil resources in the U.S. are estimated at 289 billion barrels.

Energy Policy Act of 2005

Section 369

Oil Shale, Tar Sands and Other Strategic Unconventional Fuels

Sec 369(c) Leasing program for Research and Development of Oil Shale and Tar Sands

Sec 369(d) Programmatic Environmental Impact Statement and Commercial Leasing Program for Oil Shale and Tar Sands

Sec 369(e) Commencement of Commercial Leasing

Overall Goals of Oil Shale Program

Create a program that:

A hybrid of existing Fluid and Solid minerals programs

Adopts best aspects of these programs

Easy to understand, administer and monitor

Flexible enough to adjust to new technology and issues as

they emerge

Provides adequate protection to the environment and other

the resources

Not subject to land speculation exercise

First Round R, D and D Program

Royalty: waived for the duration of the R, D and D

Rental: $.50 per acre ($2 per acre under EPAct) as required under the Mineral Leasing Act (MLA)

Diligence: require diligent development based on the Plan of Operations to be submitted by the lessee and approved by BLM

NEPA Compliance: Completed EAs

Lease term: 10 years with potential for extension for up to 5 years

Lease size: 160 acres with preference rights for an additional 4960 acres upon demonstration of commercial production

Six R, D and D Leases Issued

Shell Frontier Oil & Gas

State: Colorado

Date issued:12/151/06

Shell Frontier Oil & Gas

State: Colorado

Date issued:12/15/06

Shell Frontier Oil & Gas

State: Colorado

Date issued:12/15/06

Chevron Shale Oil Co.

State: Colorado

Date issued:12/15/06

EGL Resources, Inc. now American

Shale Oil, LLC

State: Colorado Date issued:12/15/06

Oil Shale Exploration, LLC

State: Utah

Date issued: 06/21/07

Second Round of Oil Shale R, D&D

Why a Second Round?

Secretarial decision and multiple requests from industry

Nov. 3, 2009: BLM published a 60-day Federal Register Notice calling for nominations.

Three nominations received

Exxon-Mobil (CO) Natural Soda and (CO) AuraSource (UT)

All nominations are moving forward and are currently working on NEPA analysis.

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Oil Shale RD&D Provisions

1st Round RD&D

160 acre lease with a Preference Right to an additional 4,960 acres

$2,000 application fee

10 year term with a potential 5 year extension

Lease addendums-allow choice of which regulations conversion will occur under if new regulations published

2nd Round RD&D

160 acre lease with a Preference Right to an additional 480 acres

$6,500 application fee

10 year term with a potential 5 year extension

Rents and royalties will be paid in accordance with regulations in effect at the time of conversion.

One application per entity

Additional environmental study and diligence requirements

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Energy Policy Act of 2005 Requirements

Sec 369

Interior must prepare a programmatic EIS for a commercial leasing program for oil shale, and tar sands within18 months of EPAct

Oil Shale and Tar Sands Programmatic EIS

November 17, 2008 – Final Programmatic EIS Record of Decision (ROD)

The PEIS identified about 2 million acres of oil shale and tar sands

resources that will be open for potential future leasing, exploration,

and development and the constraints under which leasing will be

allowed.

The PEIS amended 10 land use plans in those areas where oil shale

and tar sands resources are present.

Land Use Plans Amended By the PEIS Field Office Existing Land Use Plan

Colorado

Glenwood Springs

Glenwood Springs RMP (1988, as amended by the Roan Plateau Plan Amendment, 2006)

Grand Junction

Grand Junction RMP (1987)

White River White River RMP (1997, as amended by the Roan Plateau Plan Amendment, 2006)

Utah

Monticello San Juan Resource Area RMP (1991)

Price Price Field Office RMP (2006)

Richfield Henry Mountain MFP (as amended 1997)

Vernal Vernal Field Office RMP (2006)

Wyoming

Kemmerer Kemmerer RMP (1986)

Rawlins Rawlins RMP (2006)

Rock Springs Green River RMP (1997, as amended by the Jack Morrow Hills Coordinated Activity Plan, 2006)

Oil Shale Regulations

Section 369

The Secretary of the Interior must establish

royalties, fees, rentals, bonus, or other payments

for leases under the Act that shall:

Encourage development of oil shale and tar

sands, and

Ensure fair return to the United States

Regulations

Leasing

NEPA

Bonding

Royalties, Bonus Bids, Fair Market

Value

Diligent Development Milestones

Lease Conversion

Lawsuits filed in 2010 on PEIS and Regulations

13 Environmental organizations

2 organizations were granted intervener status

Settlement Agreement finalized February 2011

Lawsuit and Settlement Agreement

Plaintiffs (PEIS Lawsuit)

BLM agrees to undertake and complete planning to analyze amending plans to exclude oil shale/tar sands leasing in the original 12 plans (CO, UT, WY). ROD to be signed by 12/31/12, subject to available appropriations.

Areas that would be considered for exclusion from commercial oil shale/tar ands leasing are identified in the settlement agreement. They are: areas BLM identifies or may identify in the

planning process that contain wilderness characteristics; the whole of Adobe Town “Very Rare or Uncommon” area; core or priority sage grouse habitat as defined by BLM; all

ACECs located within the areas analyzed in the original 2008 OSTS programmatic EIS for oil

shale/tar sands; and all areas identified as excluded from commercial oil sale/tar sands leasing in Alternative C of the 2008 OSTS programmatic EIS.

As part of the NEPA, BLM will analyze the effects of at least the following three alternatives: one that analyzes removing all of the above lands from application for OSTS leasing; one

alternative that removes some, but not all, of the lands described above; and a no action alternative.

During the planning process BLM commits to not issue a call for expression of leasing interest

for commercial OSTS leases.

Settlement Agreement (EIS)

BLM will publish a notice of proposed rulemaking to address the royalty rate and environmental protection requirements applicable to oil shale leasing.

The proposed rule will propose to remove the royalty rate for oil shale production pending development by BLM of additional information concerning the costs and profitability of oil shale operations.

The proposed rule will propose several changes to the environmental protection requirements applicable to oil shale commercial leasing. These changes are listed in the proposed settlement agreement.

A final rule will be published no later than 11/18/12.

Settlement Agreement (Regs)

Current Status of Oil Shale Program

Gearing up for New PEIS

Completing Scoping meetings

Securing Contractor

Seeking Cooperating Agencies

Started Re-draft of Regulations

Monitoring RDD leases