Political Aspects of an Emerging Oil Shale Industry

Abstract

Abstract Reasons are discussed for the continued delays and present difficulties of the oil shale industry in Colorado, Wyoming and Utah, and the importance and significance of oil shale to the economic growth of the United States. This history of legal difficulties in leasing shale oil lands is presented with emphasis on the role played by the Dept. of the Interior. In discussing the future of shale oil in this country, emphasis is placed on the significance of shale oil deposits to U.S. economic growth, the economics of developing shale oil reserves and the formulation of Federal leasing policy to protect the public interest. Introduction In discussing the political aspects of an emerging oil shale industry, emphasis should be placed upon the word "emerging", for oil shale has been an "emerging" industry for many decades, and unless something is done to further its development, it may continue to be "emerging" for many more years. Before going more deeply into the reasons for the continued delays and present difficulties of the oil shale industry or its importance and significance to the economic growth and security of this nation, some historical background on oil shale, primarily for the benefit of those who are not familiar with this resource, is necessary. The oil shale deposits of current significance and interest in this country are found in the Green River formation of Colorado, Wyoming and Utah and are estimated to cover 16,000 sq miles in those three states. As would be expected, the exact extent of the deposit is imperfectly known but it is recognized that such deposit is not uniform as to thickness or richness. Most estimates have placed the shale oil potential in the three states as high as 2 trillion bbl. The Piceance Creek basin in Colorado, so far the thickest and richest known deposit, is estimated to contain 500 billion bbl of shale oil assaying more than 25 gal/ton and almost three times that amount when considering lower grade material found in the same region. The significance of these figures may be lost except by comparison with the known recoverable U. S. petroleum reserves, both primary and secondary, which are estimated at 48 billion bbl. Known world recoverable petroleum reserves are placed at about 300 billion bbl. Shale oil, then, represents this country's greatest presently recognized potential energy source and the world's largest known concentration of hydrocarbons. To prevent any misunderstanding that all oil shale is federally controlled, it may be well to point out that while large acreages involving in excess of 1 billion bbl of shale oil are privately owned, the thickest and richest deposits are on public land. It is estimated that about 70 per cent of the oil shale acreage is federally owned and 80 per cent of all shale oil in place is controlled by the federal government. History of Legal Difficulties Prior to the Mineral Leasing Act of 1920, oil shale was subject to location under the U. S. mining law. After that time, oil shale was subject to lease under very broad discretionary power granted to the Secretary of the Interior by the 1920 statute. Although statutory provision for leasing oil shale has thus been available to the Secretary of the Interior for 45 years, only two leases covering less than 5,000 acres have been issued during this period. The reason for this seemingly thwarting of the will of Congress will become more apparent later in this discussion. During the period prior to 1920 when oil shale became a leaseable mineral, many thousands of mining claims were located. The exact number is still unknown but the Department of the Interior has placed estimates as high as 150,000 claims. Regardless of the exact number, whether it be 150,000 or 15,000, the Interior Dept. has, except for relatively brief periods, looked upon these claims as a major administrative difficulty and over the years has sought ways and means to cancel the claims and extinguish any rights established by way of their location. Attempted CancellationsThe first wholesale attempt by the Interior Dept. at voiding the claims occurred in the late 1920's and the early 1930's. Section 37 of the Mineral Leasing Act, a saving clause, provided that valid claims existent on the date of passage of the act, and thereafter maintained in accordance with the laws under which initiated, could be perfected. Interior charged, and issued contests involving thousands of claims, that failure by claimants to perform annual assessment work after enactment of the Mineral Leasing Act was sufficient grounds to void a claim. JPT P. 803ˆ