Oil Report

US proposes rules to get 800 bln barrels oil shale

WASHINGTON, July 22 (Reuters) - The U.S. Interior Department on Tuesday published proposed regulations to establish a commercial oil shale program that could result in up to 800 billion barrels of recoverable oil from lands in the western United States.

The oil, which would not make it into the U.S. market until the middle of the next decade, would provide enough long-term supplies to meet current U.S. oil needs for 110 years and help reduce U.S. reliance on foreign suppliers.

“As Americans pay more than $4 for a gallon of gasoline and watch energy prices continue to climb higher and higher, we need to be doing more to develop our own energy here at home, through resources such as oil shale,” said Interior Secretary Dirk Kempthorne.

“Instead, I find it ironic that we are asking countries halfway around the world to produce more for us,” he said.

The proposed regulations, which will be open for public comment for 60 days, address the maximum size of oil shale leases and royalty rates that would have to be paid by companies.

The department is only publishing proposed regulations at this time, because Congress has blocked development of the oil shale due to environmental concerns.

Oil shale production consumes large amounts of water and power, both of which are scarce in the West. Shale rock is heated with steam to extract the oil.

Oil shale is a fine-grained sedimentary rock containing organic matter from which oil may be produced. Commercial development of oil shale will not begin until it is technologically viable, which is not expected for several years.

Commercial leases would not be issued until at least 2012, and then it would be three more years until there was significant production of oil, the department said.

The largest known deposits of oil shale are located in a 16,000-square mile (41,440 square km) area in the Green River formation in Colorado, Utah and Wyoming.

The National Association of Manufacturers welcomed the proposed regulations.

“This country is facing an energy crisis,” said NAM president John Engler. “We must take every opportunity to tap America’s own abundant energy resources to lower prices and reduce our dependence on foreign oil.” (Reporting by Tom Doggett; Editing by Marguerita Choy)