BLM Amends Oil Shale Rule to Boost Fair Return To Taxpayers and Environmental Protections
The Bureau of Land Management (BLM) today announced final amendments to the Federal oil shale management regulations to enhance fair return to taxpayers and environmental protection in any future development of oil shale on the public lands. The rule provides the Secretary of the Interior flexibility in setting royalty rates lease-by-lease, and it requires oil shale operations to include environmental protection plans for water, air, and other resources.
Oil shale is a sedimentary rock containing kerogen, from which petroleum-like liquids can be extracted. While the United States has large deposits of oil shale, including deposits on public lands, to date there are no commercial oil shale operations in the United States, due to technological and economic constraints, as well as environmental impacts. The Federal oil shale management regulations provide a structure for the potential future development of this resource.
Today’s amendments add flexibility to the royalty rates set in 2008. The existing rule required commercial operations to pay royalties of five percent in the first year of production, increasing by one percent per year until reaching a maximum rate of 12.5 percent. Under the amended rule, the 2008 royalty rates are the minimum rates for commercial oil shale leases, and the Secretary of the Interior may set higher rates on a lease-by-lease basis. This allows the Secretary to consider all relevant factors, including geology, technology, costs, and market prices for oil and gas, aligning royalties with the latest market conditions.
These amendments also strengthen environmental protections by requiring additional environmental information and planning to be included in an oil shale development plan, including a plan to protect water resources, an airshed review, an integrated waste management plan, and an environmental protection plan.
The BLM began working to revise the rules for managing oil shale after the 2008 regulations were challenged in court. In settlement of that case, the BLM agreed to propose several amendments to the 2008 regulations. In considering the public comments on the proposed rule, published in 2013, the BLM determined that improvements to the 2008 oil shale regulations were necessary to better promote the policies for oil shale leasing and development established by Congress. These final amendments also reflect changes to the proposed amendments based on public comments.