APPROPRIATIONS:

Dem aims to block U.S. support for oil shale as energy spending debate resumes

As the House resumes consideration of the fiscal 2013 energy and water appropriations bill today, a Western Democrat wants to ensure that the government does not spend any money researching oil shale extraction.

That amendment, expected to be debated as soon as this afternoon, is one of several controversial measures lawmakers will try to attach to the spending bill, including Republican attempts to continue a ban on enforcing efficiency standards for light bulbs.

Rep. Jared Polis (D-Colo.) plans to offer an amendment to the spending bill that would eliminate $25 million from the Department of Energy's fossil energy research and development budget that would be directed to oil shale development. House appropriators recommended that the money be spent "to improve the economics of oil production" and "reduce the health, safety and environmental risks associated with" oil shale extraction, according to the Appropriations Committee report accompanying the bill.

Polis' amendment would eliminate those funds and order that the proceeds be used for deficit reduction. The amendment is not Polis' first effort to dial back support for the practice; earlier this year, he failed in an effort to amend a separate energy bill to remove shale-promoting language (E&E Daily, Feb. 16).

Oil shale deposits in western Colorado, southwestern Wyoming and northeastern Utah -- not to be confused with the shale oil being produced in places such as North Dakota's Bakken field -- are believed to contain more than a trillion barrels of crude equivalent but are yet to be economically developed. Kerogen in oil shale rocks must be heated for a prolonged period to temperatures exceeding 750 degrees Fahrenheit in order to be ready for refinement, a process that requires an abundance of fuel and water in the arid West. Exxon Mobil Corp. abruptly canceled an oil shale project near Parachute, Colo., in 1982, shedding more than 2,000 jobs in an event known locally as "Black Sunday."

In contrast, production of shale oil and gas has seen tremendous growth in North Dakota, Texas and Pennsylvania thanks to advancements in horizontal drilling and hydraulic fracturing.

But Republicans and industry backers say there are massive potential reserves available in oil shale deposits in states like Colorado and Utah if only the technology can be developed to extract them economically and safely.

The Interior Department in February announced a proposal to reduce by three-fourths the amount of lands made available for oil shale research and development under a George W. Bush administration plan that was later tossed as part of a legal settlement with environmental groups (Greenwire, Feb. 3). The proposal angered Republicans and oil and gas interests, which warned the shifting regulatory landscape would scare off investments in oil shale technology. The House in February passed a bill to resurrect the Bush plan, which made available 2 million acres in the three states.

The Bureau of Land Management is also close to announcing a rule governing royalties on future oil shale development (E&ENews PM, May 18). Critics of the Bush plan said the administration's low royalty was a giveaway to industry and would fleece local communities, but the American Petroleum Institute said the settlement violates the 2005 Energy Policy Act, which required BLM to set a royalty rate that would encourage oil shale development.

Some say DOE would not even have to spend money on oil shale R&D if only BLM would give companies wider access out West with the promise that commercial leases would be available.

"If DOI weren't doing what it did ... what they could do instead is say, 'Companies, you pay us money for the right to look at this -- consistent with the Clean Water Act, Clean Air Act all the rest of those things. If you can figure out a way to turn this stuff into a producible product, then we both stand to make money,'" said Dan Kish, senior vice president for policy at the Institute for Energy Research, an industry-backed think tank.

But Polis doesn't see things that way.

"The reason that energy companies aren't spending money on oil shale is because they know that producing energy from oil shale is a fantasy," Polis spokesman Chris Fitzgerald said in an email yesterday. "They've been failing to produce energy from oil shale for 100 years. If energy companies believe despite 100 years of failure that there's a future in oil shale then they should invest their own profits in this research rather than wasting taxpayer money."

Kish acknowledges that technology advancements are needed before oil shale could be extracted economically, but he said such extraction would be possible at recent oil prices if adequate exploration were allowed. U.S. crude has generally been trading in the range of about $80 to $100 per barrel over the last year, according to the Energy Information Administration.

He also said companies were not in a hurry to invest in oil shale development because of other promising opportunities in the Bakken Shale and other formations as well as offshore.

"The promise of that probably means that the money's going to tend to gravitate towards that first," Kish said. "So nobody's really breaking down the door."

Other amendments on tap this week

The House began considering the $32.1 billion energy and water spending bill last week with debate on more than a dozen amendments, most of which failed (E&ENews PM, June 1). The White House threatened to veto the bill virtually as soon as debate began (E&E Daily, June 1).

The bill returns to the floor this afternoon, and several other amendments filed in Friday's Congressional Record offer hints of what's to come.

Rep. Michael Burgess (R-Texas) filed his amendment to continue a ban on enforcing DOE's efficiency standards for light bulbs, which were established in the 2007 energy bill but have never been enforced. Burgess, who succeeded in attaching similar language to the fiscal 2012 spending bill, previously indicated he would offer the amendment this year, although it is likely to encounter more resistance from Senate Democrats than it did during debate on the spending measure last year (E&E Daily, May 8).

Freshman Rep. Chip Cravaack (R-Minn.) sounded a similar note with an amendment that would prevent DOE from requiring grant recipients to "replace any lighting that does not meet or exceed the energy efficiency standards" set by the 2007 law.

Rep. Andy Harris (R-Md.), another freshman, submitted an amendment that would bar DOE from funding any international program activities, with the exception of a grant program to support renewable energy research and development in Israel.

Rep. Paul Broun (R-Ga.) offered four amendments related to the allocation of state weatherization assistance funds, the types of activities that could be funded by Advanced Research Projects Agency-Energy grants and the use of DOE money to support loan guarantees.

Rep. Scott Tipton (R-Colo.) wants to prevent DOE from conducting any surveys in which respondents are paid, according to an amendment he offered.

Rep. Louie Gohmert (R-Texas) offered an amendment to prevent DOE from building, buying or leasing any new facilities in Washington, D.C.

Burgess also offered an amendment to cut $100 million from the $2.28 billion appropriated to DOE for nuclear nonproliferation activities.

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