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AMERICAN JOBS AND ENERGY 

SECURITY: DOMESTIC OIL SHALE— 

THE STATUS OF RESEARCH, 

REGULATION AND ROADBLOCKS 

OVERSIGHT FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES 

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

Wednesday, August 24, 2011, in Grand Junction, Colorado 

Serial No. 112-56 

Printed for the use of the Committee on Natural Resources 

( 

Available via the World Wide Web: http://www.fdsys.gov 

or 

Committee address: http://naturalresources.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

DOC HASTINGS, WA, Chairman 

EDWARD J. MARKEY, MA, Ranking Democrat Member 

Don Young, AK 

John J. Duncan, Jr., TN 

Louie Gohmert, TX 

Rob Bishop, UT 

Doug Lamborn, CO 

Robert J. Wittman, VA 

Paul C. Broun, GA 

John Fleming, LA 

Mike Coffman, CO 

Tom McClintock, CA 

Glenn Thompson, PA 

Jeff Denham, CA 

Dan Benishek, MI 

David Rivera, FL 

Jeff Duncan, SC 

Scott R. Tipton, CO 

Paul A. Gosar, AZ 

Rau ́l R. Labrador, ID 

Kristi L. Noem, SD 

Steve Southerland II, FL 

Bill Flores, TX 

Andy Harris, MD 

Jeffrey M. Landry, LA 

Charles J. ‘‘Chuck’’ Fleischmann, TN 

Jon Runyan, NJ 

Bill Johnson, OH 

Dale E. Kildee, MI 

Peter A. DeFazio, OR 

Eni F.H. Faleomavaega, AS 

Frank Pallone, Jr., NJ 

Grace F. Napolitano, CA 

Rush D. Holt, NJ 

Rau ́l M. Grijalva, AZ 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Dan Boren, OK 

Gregorio Kilili Camacho Sablan, CNMI 

Martin Heinrich, NM 

Ben Ray Luja ́n, NM 

John P. Sarbanes, MD 

Betty Sutton, OH 

Niki Tsongas, MA 

Pedro R. Pierluisi, PR 

John Garamendi, CA 

Colleen W. Hanabusa, HI 

Vacancy 

Todd Young, Chief of Staff 

Lisa Pittman, Chief Counsel 

Jeffrey Duncan, Democrat Staff Director 

David Watkins, Democrat Chief Counsel 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

DOUG LAMBORN, CO, Chairman 

RUSH D. HOLT, NJ, Ranking Democrat Member 

Louie Gohmert, TX 

Paul C. Broun, GA 

John Fleming, LA 

Mike Coffman, CO 

Glenn Thompson, PA 

Dan Benishek, MI 

David Rivera, FL 

Jeff Duncan, SC 

Paul A. Gosar, AZ 

Bill Flores, TX 

Jeffrey M. Landry, LA 

Charles J. ‘‘Chuck’’ Fleischmann, TN 

Bill Johnson, OH 

Doc Hastings, WA, ex officio 

Peter A. DeFazio, OR 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Dan Boren, OK 

Gregorio Kilili Camacho Sablan, CNMI 

Martin Heinrich, NM 

John P. Sarbanes, MD 

Betty Sutton, OH 

Niki Tsongas, MA 

Vacancy 

Edward J. Markey, MA, ex officio 

(III) 

CONTENTS 

Page 

Hearing held on Wednesday, August 24, 2011 ...................................................... 1 

Statement of Members: 

Lamborn, Hon. Doug, a Representative in Congress from the State of 

Colorado ......................................................................................................... 1 

Prepared statement of ............................................................................... 3 

Tipton, Hon. Scott R., a Representative in Congress from the State of 

Colorado ......................................................................................................... 4 

Prepared statement of ............................................................................... 5 

Statement of Witnesses: 

Aho, Gary D., Board Member/Former Chairman, National Oil Shale 

Association ..................................................................................................... 56 

Prepared statement of ............................................................................... 58 

Hagood, Michael C., Director, Program and Regional Development, 

Energy and Environment Science & Technology, Idaho National 

Laboratory ..................................................................................................... 17 

Prepared statement of ............................................................................... 19 

Hankins, Helen, Colorado State Director, Bureau of Land Management, 

U.S. Department of the Interior .................................................................. 6 

Prepared statement of ............................................................................... 8 

McCloud, Brad, Executive Director, Environmentally Conscious 

Consumers for Oil Shale .............................................................................. 59 

Prepared statement of ............................................................................... 61 

Mittal, Anu K., Director, Natural Resources and Environment Team, 

U.S. Government Accountability Office ...................................................... 35 

Prepared statement of ............................................................................... 36 

Highlights .................................................................................................. 44 

Sladek, Thomas A., PhD, Director, Ockham Energy Services ...................... 21 

Prepared statement of ............................................................................... 23 

Response to questions submitted for the record ..................................... 27 

Spehar, Hon. James G., Former Mayor, Grand Junction, Colorado, and 

Past President, Colorado Municipal League ............................................... 62 

Prepared statement of ............................................................................... 64 

Letter to Secretary of the Interior Ken Salazar dated November 18, 

2009, submitted for the record ............................................................. 68 

Letter to Secretary of the Interior Ken Salazar dated December 17, 

2010, submitted for the record ............................................................. 70 

Letter to Senator Mark Udall dated March 24, 2011, submitted for 

the record ............................................................................................... 72 

Spinti, Jennifer P., Research Associate Professor, Department of 

Chemical Engineering, and Assistant Director, Institute for Clean and 

Secure Energy, The University of Utah ...................................................... 28 

Prepared statement of ............................................................................... 30 

Whitney, Dan, Heavy Oil Development Manager, Shell Exploration and 

Production Company ..................................................................................... 52 

Prepared statement of ............................................................................... 53 

Additional materials supplied: 

Burnham, Alan, PhD, Chief Technology Officer, American Shale Oil 

(AMSO), LLC, Statement submitted for the record ................................... 80 

List of documents retained in the Committee’s official files ......................... 81 

(1) 

OVERSIGHT FIELD HEARING ON ‘‘AMERICAN 

JOBS AND ENERGY SECURITY: DOMESTIC 

OIL SHALE—THE STATUS OF RESEARCH, 

REGULATION AND ROADBLOCKS.′′ 

Wednesday, August 24, 2011 

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Natural Resources 

Grand Junction, Colorado 

The Subcommittee met, pursuant to call, at 9:05 a.m., at Grand 

Junction City Hall, 250 North 5th Street, Grand Junction, 

Colorado, Hon. Doug Lamborn [Chairman of the Subcommittee] 

presiding. 

Present: Representatives Lamborn and Tipton. 

STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Mr. LAMBORN. The Committee will come to order. The Chairman 

notes the presence of a quorum, which under Committee Rule 3(e) 

is two Members. The Subcommittee on Energy and Mineral 

Resources is meeting today to hear testimony on an oversight hearing on American Jobs and Energy Security: Domestic Oil Shale— 

The Status of Research, Regulation, and Roadblocks. 

Under Committee Rule 4(f), opening statements are limited to 

the Chairman and Ranking Member of the Subcommittee. However, I ask unanimous consent that Mr. Tipton be permitted to give 

an opening statement and to include any other Members’ opening 

statements in the hearing record if submitted to the clerk by close 

of business today. 

Hearing no objection, so ordered. 

Mr. LAMBORN. I now recognize myself for 5 minutes. 

Thank you all for being here today. This is a very important 

topic. 

I am Congressman Doug Lamborn, and I have the privilege of 

not only representing Colorado in the Congress, but I am also 

Chairman of the House Natural Resources’ Subcommittee on 

Energy and Mineral Resources. 

I am especially pleased that my colleague, Scott Tipton, is here. 

Representative Tipton has made a big impression in just the few 

months he has been in Congress and on this Committee in particular, and he is known as a staunch defender of the interests of 

the 3rd Congressional District. 

And in honor of being in the 3rd Congressional District, I wore 

my Mesa Verde tie—— 

[Laughter.] 

Mr. LAMBORN. Which is one of the highlights of the vast and 

beautiful 3rd District, a manmade wonderful place to visit. I urge 

2 

everyone here to go there if you haven’t already, especially visitors 

here. I am sure hometown people have already been there. 

But there are so many wonderful things in the 3rd District to do 

and to see, and that is one of the things that we need to talk about 

here at this meeting today. I think that we can balance all of the 

competing needs that are so important. 

We have the environment with protected species. We have environmentally sensitive fish and other wildlife that need to be protected for tourism. We need to have water protected. That is such 

a tremendous and important resource here in the West. We need 

an opportunity for jobs to be created and for the economy to grow. 

So I think that we, as Americans, can accomplish all of these 

things at the same time. 

Our Subcommittee has broad jurisdiction over onshore and offshore energy production on public lands. Obviously, much of that 

we have here in the West. And these are issues that affect every 

one of us here in Colorado. 

Today, we are here specifically to discuss one of the most challenging, tantalizing, and promising sources of energy our country 

has to offer, oil shale. The United States is blessed with tremendous oil shale resources. Nearly 75 percent of the world’s recoverable oil shale is estimated to be located in this country, and we 

have been called by some the ‘‘Saudi Arabia of oil shale.’’ 

Much of that is located right here around us in this three-State 

region, where, according to the U.S. Geological Survey, the Western 

United States may hold more than 1.5 trillion barrels of oil, enough 

to provide us, if it were to be used and produced, with energy for 

the next 200 years. 

Unfortunately, the oil shale development has historically been 

characterized by boom and bust, industrial surges due to inconsistent and sometimes contentious Federal policies regarding leasing and land development. As Federal land contains about 80 percent of the known recoverable resources in the West, these policies 

are sometimes significantly hindering the research and development projects that could lead to commercial oil shale production. 

In 2005, the House of Representatives passed the Energy Policy 

Act of 2005, which directed the Department of Energy and the 

Bureau of Land Management to expand their work on oil shale. 

Accordingly, in 2007, six areas of land were leased for oil shale 

projects. 

However, since then, the Obama Administration has shown little 

support or interest in the advancement of these projects. Shortly 

after taking office, they delayed RD&D leases and offered a second 

round of leases with new, revised, and restrictive lease terms that 

were so uninviting to oil shale production that industry showed almost no interest in procuring this valuable land. 

Although they did receive some applications, the leases have yet 

to be issued. To add further burdens to the process, in February, 

the Obama Administration announced that they would be reviewing the current rules for commercial oil shale leasing, adding further delays to an already unreasonably prolonged process. 

While oil shale development is still in its infancy in the United 

States, other countries, such as Brazil, Estonia, Jordan, and China, 

support substantial oil shale industries without having nearly the 

3 

same amount of oil shale resources that we have here. Instead of 

promoting American jobs and developing cutting-edge, clean technologies to utilize these resources and lead the way in global development of this resource, the Obama Administration has stonewalled its production, diverted resources that could be used for oil 

shale RD&D, and continues to put up roadblocks for companies 

that want to utilize Federal land for energy production. I find this 

extremely troubling. 

I am especially looking forward to our witnesses’ thoughts on 

how we can successfully expand the oil shale industry while preserving a resource that we in the West work hard to conserve— 

water. Striking a balance between energy production and water 

management is, and continues to be, an extremely important issue 

for our region. It is vital that we continue to safeguard this precious natural resource while at the same time creating jobs for our 

citizens and producing homegrown energy for all Americans. 

Again, I want to thank our witnesses for taking time out of your 

busy schedules to be with us today. Thank you all for being here, 

and I look forward to hearing from the testimony shortly. 

At this point, I would now like to recognize Representative Scott 

Tipton for an opening statement. 

[The prepared statement of Mr. Lamborn follows:] 

Statement of The Honorable Doug Lamborn, Chairman, 

Subcommittee on Energy and Mineral Resources 

Thank you everyone for being here today. I’m Congressman Doug Lamborn and 

I not only have the privilege of serving you all in my home state of Colorado, but 

I am also the Chairman of the House Natural Resources Subcommittee on Energy 

and Mineral Resources. Our subcommittee has broad jurisdiction over onshore and 

offshore energy production on public lands, much of which we have here in the 

West—and issues that affects every single one of us in from the state of Colorado. 

Today we are here to discuss one of the most challenging, tantalizing, and promising sources of energy our country has to offer—oil shale. The United States is 

blessed with tremendous oil shale resources—nearly 75% of the world’s recoverable 

oil shale is estimated to be located in this country and we have appropriately been 

called the ‘‘Saudi Arabia of oil shale.’’ Most of that shale is located right here around 

us, where according to the U.S. Geological Survey, the Western United States may 

hold more than 1.5 trillion barrels of oil –enough to provide the United States with 

energy for the next 200 years. 

Unfortunately, oil shale development has historically been characterized by ‘‘boom 

and bust’’ industrial surges due to inconsistent and combative federal policies regarding leasing and land development. As federal land contains about 80 percent 

of the known recoverable resources in the West, these policies are significantly hindering the research and development projects that could lead to commercial oil shale 

production. 

In 2005, the House of Representatives passed the Energy Policy Act of 2005 which 

directed the Department of Energy and the Bureau of Land Management to expand 

their work on oil shale. Accordingly, in 2007 six areas of land were leased for oil 

shale projects. However, since then, the Obama Administration has shown little 

support or interest in the advancement of these projects. Shortly after taking office 

they delayed RD&D leases, and offered a second round of leases with new, revised 

lease terms that were so uninviting to oil shale production that industry showed 

nearly no interest in procuring this valuable land. Although they did receive applications, the leases have yet to be issued. To add further burdens to the process, in 

February the Obama Administration announced they would be re-reviewing the current rules for commercial oil shale leasing, adding further delays to an already unreasonably prolonged process. 

While oil shale development is still in its infancy in the United States, other countries such as Brazil, Estonia, Jordan, and China support substantial oil shale industries without nearly the amount of oil shale resources we have in our country. Instead of promoting American jobs and developing cutting edge clean technologies to 

utilize these resources and lead the way in global development of this resource, the 

4 

Obama Administration has stonewalled its production, diverted resources that could 

be used for oil shale RD&D, and continues to put up roadblocks for companies that 

want to utilize federal land for energy production. This is extremely concerning. 

I am especially looking forward to our witnesses’ thoughts on how we can successfully expand the oil shale industry while preserving a resource that we in the West 

work hard to conserve—water. Striking a balance between energy production and 

water management is, and continues to be an extremely important issue for our region. It is vital that we continue to safeguard this precious natural resource while 

at the same time creating jobs for our citizens and producing homegrown energy for 

all Americans. 

Again, I want to thank our visitors for taking time out of your busy schedules to 

be with us today and look forward to hearing from our witnesses. 

STATEMENT OF THE HON. SCOTT TIPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Mr. TIPTON. Thank you, Congressman Lamborn. I would like to 

thank you for conducting this hearing. 

I want to join with him as well in thanking all of our witnesses 

for taking the time out of your busy schedules to come in and talk 

about a very important issue and for everyone else in attendance 

as well. 

We have some real challenges that we are facing as a Nation 

when we look at what is going on right now in the Middle East, 

the turmoil in Egypt, in Libya, Syria, Jordan, and the challenge of 

Iran perhaps getting a nuclear weapon, which will further destabilize the Middle East. 

When we look at the importance of the flow of oil coming out of 

the Suez Canal not only for the American economy, but for the 

world economy as well, the time is appropriate for the United 

States to grasp the reins of its own economic future, its own energy 

future. The 3rd Congressional District of Colorado can play a very 

important role. 

Recently, President Obama made an announcement favoring $1 billion going to Brazil to be able to develop their resources off 

of their shores and proclaimed that we wanted to be one of their 

best customers. The question that crossed my mind is, if we are 

going to be making an investment, wouldn’t it be better to invest 

dollars on American soil, developing American resources, putting 

Americans back to work, creating an opportunity to get the American economy moving once again? 

For me, that is an easy answer. As I travel throughout the 3rd 

Congressional District—so far during this break, I have been from 

Cortez to Grand Junction. I will be in Steamboat down to Pueblo, 

down to Trinidad, over to Alamosa. As we go through every one of 

our communities, I think many of us who live here, it breaks our 

hearts as we drive through our communities, and we are seeing 

closed stores. We are seeing businesses that are facing a challenge. 

As I have walked down Main Street, Grand Junction, I have 

shaken hands with people that are worried about their economic 

future. Mothers that are worried about being able to provide for 

their children. 

We have to get this economy moving. Energy plays an important 

role in that. But we are also very cognizant here in the 3rd Congressional District of the valuable resource that we have called our 

public lands. The beauty of our landscapes, the value of our water, 

the value of the air that we breathe. 

5 

Well, it has been my experience going out, the people that are 

working in developing our natural resources breathe that same air, 

drink that same water. We can develop these resources responsibly. 

We can create a win-win. It does not have to be a win-lose scenario 

in the United States of America. 

We are truly talking about the future of our Nation. If we are 

going to capitulate our ability to be able to provide energy, to be 

able to drive the economic engine, which means providing for our 

families, putting roofs over our head and food on our table, we have 

that opportunity. The 3rd Congressional District can play a very 

important role in doing that. 

We will all stand guard to make sure that it is done responsibly. 

We will hold the industry accountable to make sure that that is 

done. But it is important that we take this opportunity at this 

point in time to make sure that we are developing responsibly 

American resources on American soil and getting Americans back 

to work. 

I am very appreciative of Congressman Lamborn holding this 

hearing in regards to oil shale. As he noted, we have the potential 

to have 1.5 trillion barrels of oil. That doesn’t even include the natural resources that we have in natural gas as well. 

I am an ‘‘all of the above’’ sort of a guy. I think that we need 

to be developing wind, solar, geothermal. It is going to be the entire 

package to be able to move to economic certainty and an energy 

certainty for America. 

This district can play a very important role, and I thank you for 

conducting I believe this very important hearing. Again, I thank all 

of our witnesses for taking the time to be here, as we explore this 

and see where we can create those opportunities to create a winwin for America and to be able to get our people back to work and 

get the American economy moving once again. 

Thank you. 

[The prepared statement of Mr. Tipton follows:] 

Statement of The Honorable Scott Tipton, a Representative in Congress 

from the State of Colorado 

Thank you Mr. Chairman for convening today’s hearing, and thanks to the panelists and the folks from the Third District for being with us today in Grand Junction 

to examine this very important issue. 

The USGS indicates that there are as many as 1.5 trillion barrels of recoverable 

oil shale in the United States, the vast majority of which is in Colorado, Wyoming, 

and Utah. Of this, some of the most promising reserves are in the Pineance Basin 

in northwest Colorado. As a result, the Third Congressional District of Colorado, 

along with our neighboring western states, are in a unique position to contribute 

to our nation’s energy security, ensure that the United States remains competitive 

in the world market, and to create much needed jobs here at home. 

The world’s primary energy demand has grown by more than 50% since the year 

1980 and this growth is expected to continue at an annual rate of 1.6% during the 

30 years. Over 70& of this growth is expected to come from developing countries 

and fossil fuels are estimated to provide the vast majority of the energy during this 

period, even with increased efforts towards production of renewable energy sources 

and new technological advancements in the renewable energy sector. While we must 

continue to support the development of all our domestic energy resources, it is naı ̈ve 

to think that renewable resources can replace hydrocarbons in the near future. For 

the sake of our national security, our economic stability, and our ability to remain 

competitive in the world market, we must continue to move towards new innovations in unconventional oil production, most notably, oil shale here in the Western 

United States. 

6 

Because 72 percent of the oil shale in this area is beneath lands governed by the 

Department of the Interior, the policies of this administration and those to come 

play a significant role in whether or not we are able to make wise use of these resources. The road to viability for the oil shale industry is reliant on a predictable 

regulatory structure and an environment in which companies can invest in research 

and development and create jobs. To this end, it is critical that the federal government remove duplicative approval processes and help, rather than hinder development in the United States. The proper implementation of our environmental and 

safety regulations already on the books is a far better strategy than adding additional layers of bureaucracy to the process. By establishing a common sense regulatory framework and embracing research and development of oil shale, we can continue to remain competitive, ensure national security, and provide an environment 

for job creation here in western Colorado and in our neighboring western states. 

Mr. LAMBORN. All right. And thank you. 

I also should note for the record that the Ranking Member, Representative Rush Holt of New Jersey, very much wanted to be here. 

We talked on the phone. He just couldn’t rearrange his schedule 

enough to make it work to be here. 

It did not help matters when we had originally scheduled this for 

late July at a time when we were going to be back in our districts 

and not in Washington, but we had to change everything because 

of those important debt ceiling negotiations that required us to be 

in Washington after all during that week. So everything got turned 

around. 

I would like to now hear from the invited witnesses, and I want 

to ask forward Ms. Helen Hankins, Colorado State Director of the 

Bureau of Land Management, and Mr. Ronald C. Johnson, Oil 

Shale Assessment Project Chief for the U.S. Geological Survey. 

This is our first panel. 

We were going to have one more larger panel, but what we are 

going to actually do is have two smaller panels because of space 

limitations. So we will have a total of about 10 witnesses that we 

are going to hear from who are experts in various facets of this important subject. 

But now we will start with these two in particular. Like all witnesses, your written testimony will appear in full in the hearing 

record. So I ask that you keep your oral statements to 5 minutes, 

as outlined in the invitation letter to you and under Committee 

Rule 4(a). 

Our microphones are automatic. So you do not need to turn them 

on when you are ready to begin, and you will see the timing light, 

which will go on. After 4 minutes, it will turn yellow and then, 

after 5 minutes, will turn red. 

Ms. Hankins, you may begin. Thank you for being here. 

STATEMENT OF HELEN HANKINS, COLORADO STATE 

DIRECTOR, BUREAU OF LAND MANAGEMENT, ACCOMPANIED BY RONALD C. JOHNSON, OIL SHALE ASSESSMENT 

PROJECT CHIEF, U.S. GEOLOGICAL SURVEY 

Ms. HANKINS. Thank you very much for the invitation to speak 

before this Subcommittee hearing. 

As stated, my name is Helen Hankins. I am the State Director 

for the Bureau of Land Management in Colorado. 

Mr. LAMBORN. And Ms. Hankins, if you can make sure that you 

talk into the microphone so everyone can hear you. Thank you. 

7 

Ms. HANKINS. It is my pleasure to discuss the oil shale program 

of BLM and the Department of the Interior this morning. 

As we know, oil shale is a very abundant resource in the Western 

United States, particularly Colorado, Wyoming, and Utah. A recent 

assessment, actually several assessments by the U.S. Geological 

Survey indicate that there are 4.3 trillion barrels of oil present in 

place in these States. 

We have had a long history of interest in oil shale dating back 

to the late 1800s, when anecdotal information tells us that a homesteader built a fireplace of oil shale and during a housewarming 

party not only saw his fireplace, but his home go up in flames. 

Even since those days and particularly in the last three or four 

decades, people have continued to have an interest in oil shale development. But to date, we do not yet have a commercially viable, 

environmentally responsible approach here in the United States. 

The Energy Policy Act of 2005 provided that the Department of 

the Interior establish a program for research, development, and 

demonstration leases; that we complete a programmatic environmental impact statement for identification of available lands for oil 

shale and tar sand development; and that we launch a commercial 

leasing program for oil shale and tar sands. 

In 2008, a programmatic EIS was completed as required by this 

Act, and 8 of BLM’s land use plans were amended to provide for 

1.9 million acres being available potentially for oil shale development. In 2006 and ’07, in what is referred to as ‘‘round one,’’ six 

leases were issued for research, development, and demonstration 

projects. Work is actively going on on all of these leases. 

In 2010, based on industry’s request, the Secretary determined 

to initiate a second round of RD&D nominations. Three of those 

nominations have been advanced, and those companies are currently completing environmental assessment work, which must be 

completed before leases can be issued. 

The BLM’s goal, as we manage this important program on the 

public lands, is to provide an opportunity for companies to develop 

new generation of technology that ensures that we have environmentally responsible development, commercially viable operations, 

and that we can provide a fair return to the American public for 

the extraction of this resource and the use of these public lands. 

We are currently beginning a new planning process with the development of a programmatic environmental impact statement to 

reexamine lands that are suitable for oil shale leasing and potential development. We also, at the same time, are undertaking a review of the regulations that were developed previously to make 

sure that we have an environmentally responsible and sound management approach to oil shale development. 

Many of us here can recall the oil shale leases that were issued 

in the 1970s and some of the concerns associated with those. Those 

lessons have helped us remember that we must have an understanding of environmentally acceptable development and commercially viable operations before we approve leases of large acreages 

for the development of this resource. 

Research, development, and demonstration projects are key to 

advancing oil shale development on public lands. They help companies test their bench-scale technologies at the field level, and they 

8 

provide an opportunity to evaluate various aspects of development, 

including environmental concerns. 

There are several questions that we all need to be thinking about 

and which Representative Lamborn and Representative Tipton alluded to in their opening remarks. One of the key things is, are the 

current technologies going to be commercially viable and environmentally responsible? 

We also need to make sure that we have an understanding of the 

potential impacts on our Western lands, wildlife—habitat and wildlife, and water as we proceed with the development of this industry. As was addressed by both of our Representatives, water is a 

key factor here in the West, and it is, of course, not of boundless 

supply. So part of our analysis needs to consider water availability 

in the arid West in which we live. 

These are fundamental questions which we need to be sure that 

we address as we proceed with our efforts. BLM is interested in a 

balanced and orderly approach, but we want to ensure that we address these environmental concerns, water issues, and commercially viable operations. 

Thank you for the opportunity to appear before your Subcommittee today. And at the appropriate time, I will be happy to 

answer any questions you may have. 

[The prepared statement of Ms. Hankins follows:] 

Statement of Helen Hankins, Colorado State Director, 

Bureau of Land Management, United States Department of the Interior 

Good morning. My name is Helen Hankins, and I am the state director of the Bureau of Land Management’s Colorado office. It is my pleasure to testify before you 

on the Department of the Interior’s Oil Shale Program here in the Centennial State, 

which, along with Utah and Wyoming, is home to the nation’s largest reserves of 

oil shale. 

Background 

Oil shale is a type of rock that contains kerogen, a waxy organic material that 

can be refined to make oil. It is a resource that the nation has been trying to unlock 

for the past century because it is so abundant. U.S. resources are approximately 4.3 

trillion barrels of oil in place, a significant portion of the world’s resources, according to the U.S. Geological Survey (USGS). However, after many attempts to develop 

the resource, no one has yet discovered how to extract it economically on a commercial scale. 

The Energy Policy Act of 2005 directed the Department of the Interior to establish 

a leasing program for oil shale research and development, publish a programmatic 

environmental impact statement (PEIS), and launch a commercial leasing program. 

In 2008, the BLM published the PEIS that amended eight resource management 

plans in Colorado, Utah, and Wyoming to make approximately 1.9 million acres of 

public lands potentially available for commercial oil shale development and 431,224 

acres for tar sands leasing and development. 

In 2006 and 2007, the BLM issued six oil shale Research, Development, and Demonstration (RD&D) leases. The BLM’s goal is to provide an opportunity for companies to develop a new generation of oil shale technologies by establishing an orderly 

and environmentally responsible program that provides a fair return for taxpayers. 

In 2010, the BLM advanced three nominations for a second round of RD&D leases. 

For a variety of reasons, the BLM began a new planning process this year that 

would take a fresh look at what public lands are best suited for oil shale and tar 

sands development. This planning process will not disturb RD&D activities already 

under way; rather, any information developed from RD&D activities may help inform this planning process. In addition, the BLM anticipates taking a fresh look at 

the regulations governing oil shale development to ensure they reflect a sound management approach. 

The BLM’s RD&D program is essential to encouraging companies to test their 

bench-scale technologies and to help answer fundamental questions about how oil 

shale might be safely and economically developed on a commercial scale. The RD&D 

9 

program began with the intent of avoiding the mistakes of the 1960s and 1970s, 

which left a legacy of spent shale piles, contaminated runoff, and multimillion dollar 

cleanups. One need not look further than the Naval Petroleum Oil Shale Reserves 

1 and 3 here in Colorado to know that the oil is extractable, but at a significant 

cost to the environment and taxpayers. Approximately $25 million has been spent 

on clean-up and monitoring that continues to this day. The work has included excavating spent shale and preparing a storage vault to protect a tributary of the Colorado River from potentially hazardous runoff. 

The BLM learned from four leases issued in Utah and Colorado in the 1970s that 

companies must first demonstrate that their technology is economically viable and 

environmentally sound before approving a development process that could potentially disturb thousands of acres of public lands. On ‘‘Black Sunday’’ in 1982, a 

major oil shale player shutdown its oil shale development efforts, called the Colony 

Project, putting 2,000 people out of work in single day, and demonstrating the potential harm when communities count on an industry that hasn’t proved the sustainability of its proposed development. 

USGS Resource Assessments 

The Green River Formation in the Piceance Basin (Colorado), the Uinta Basin 

(Utah and Colorado), and the Greater Green River Basin (Wyoming, Colorado, and 

Utah) contains one of the largest known oil shale deposits in the world. Recent 

USGS assessments estimate an in-place oil volume of 1.53 trillion barrels in the 

Piceance Basin (http://pubs.usgs.gov/dds/dds-069/dds-069-y/), 1.32 trillion barrels in 

the Uinta Basin (http://pubs.usgs.gov/dds/dds-069/dds-069-bb/), and 1.44 trillion barrels in the Greater Green River Basin (http://pubs.usgs.gov/fs/2011/3063/). The oil 

shale deposit in the Piceance Basin is probably the world’s most concentrated oil 

shale resource with as much as 400,000 barrels of oil in place per acre. It is important to note that these resource assessments are in-place resources rather than 

technically recoverable resources because there is currently no commercial oil shale 

development in the United States. 

The mineral nahcolite is associated with high-grade oil shale deposits in the 

Piceance Basin, and because it is important as a leasable mineral, the USGS assessed its resource potential as well. Nahcolite has an in-place resource estimate of 

43 billion short tons. The nahcolite is intimately associated with the oil shale horizons in the richest part of the basin and therefore will be affected by any oil shale 

development in that area. 

The U.S. Geological Survey recently subdivided the 1.53 trillion barrels of in-place 

oil shale in the Piceance Basin into several subsets (http://pubs.usgs.gov/fs/2010/ 

3041/). Of the 1.53 trillion barrels total, about 920 billion barrels (60 percent) exceed 

15 gallons of oil per ton of oil shale (GPT), and about 352 billion barrels (23 percent) 

exceed 25 GPT. More than 67 percent of the total in-place resource, or 1.027 trillion 

barrels, is located under Federal lands. About 689 billion barrels (75 percent) of the 

15 GPT total and about 285 billion barrels (81 percent) of the 25 GPT total are 

under Federal mineral (subsurface) ownership. An evaluation of the Federal oil 

shale resources in Wyoming is nearing completion and should be available in the 

near future. 

Development Questions 

There are several issues that need to be addressed before a successful commercial 

oil shale program will be economically viable. 

The first is whether the technologies that are currently being developed can become viable on a commercial scale. Some of the technologies under development 

would require vast amounts of energy, increasing production costs and creating a 

burden on the power grid. The companies working on these challenges report generally that they are several years away from knowing whether their technologies 

will work on a commercial scale. 

The second is to understand the potential impacts of commercial oil shale development on Western lands, wildlife, and watersheds. Historically, the techniques of retorting or milling the shale have caused serious environmental consequences, creating large concentrations of contaminants in areas not designed to contain them. 

In the arid West where water supplies are extremely limited, much hinges on the 

question of water. Accordingly, we must have a better understanding of the impacts 

of oil shale development on the water supply. 

The Government Accountability Office studied the issue of oil shale development 

impacts on water resources, and determined in an October 2010 report that: ‘‘Oil 

shale development could have significant impacts on the quality and quantity of 

water resources, but the magnitude of these impacts is unknown because technologies are years from being commercially proven, the size of a future oil shale inVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
10 

dustry is uncertain, and knowledge of current water conditions and groundwater 

flow is limited.’’ To address these important water questions, the USGS has begun 

to gather baseline data that would be used to analyze groundwater and surface 

water systems that could be affected by commercial-scale oil shale development. 

In light of the many fundamental questions about oil shale that need to be answered, it is vital that the BLM administer a balanced, carefully planned RD&D 

program. As the BLM takes a fresh look at the regulations governing oil shale development, it will ensure that the regulations reflect the latest information about 

water, potential environmental considerations, and uphold its responsibility to deliver taxpayers a fair return on the development of this resource. 

Moving Forward with RD&D 

Of the six leases issued in 2006 and 2007, five are in Colorado and one is in Utah. 

Activity is under way on the RD&D lease sites. American Shale Oil, which owns 

one of the leases, reports that its processing facilities are 90% complete with plans 

to initiate pilot testing soon. Other leaseholders also report progress in establishing 

extraction techniques. 

In the second round of RD&D leases, three nominations, two in Colorado and one 

in Utah, advanced in October 2010. Analysis under the National Environmental 

Protection Act (NEPA) is under way to examine how the proposed technologies will 

affect the environment. Issuance of those leases will depend largely on the results 

of the NEPA analyses and other factors as the nominees refine their individual processes for developing oil shale. 

This is an exciting time as these companies move forward, testing new technologies to harness this abundant resource. At the Department of the Interior, we 

are pleased to be part of the effort to keep the oil shale program on an orderly and 

successful path, encouraging development while ensuring environmental protection. 

Conclusion 

Thank you again for the opportunity to testify on the Oil Shale Program. I would 

be glad to answer your questions. 

Mr. LAMBORN. All right. Thank you so much. 

I should note for clarification that Mr. Johnson won’t be directly 

testifying but is available to answer technical questions as needed. 

I will go ahead and start with questions. I will recognize myself. 

First of all, a very quick question, then a couple of longer questions. 

Ms. Hankins, as you know, the Administration is currently reviewing a second round of oil shale RD&D leases. Can you tell us 

when we can expect a final decision on this second round of potential leases? 

Ms. HANKINS. The timeframe on when the bureau will make decisions on those RD&D leases depends on when the companies involved complete the environmental assessment work and those environmental assessments are reviewed. Right now, each of those 

three companies are in the midst of doing that environmental review. 

So I am not able to give you a precise estimate. But I can tell 

you that the companies are diligently pursuing that effort, and as 

soon as we receive their environmental documents, we will very 

carefully and diligently look at them and proceed as quickly as possible with the next steps. 

Mr. LAMBORN. OK. Now a little bit lengthier question. In 2009, 

BLM announced a second round of 160-acre oil shale RD&D leases. 

However, while the first round of leases allowed for the potential 

expansion of 5,120 acres of commercial development, in the second 

round of leases, the terms were decreased, and only 480 acres were 

available for potential expansion. 

11 

We have heard that this decrease of land available was one of 

the main reasons for industry’s apparent lack of interest in the second round of leases. Can you tell us the reason for this large decrease in potential land expansion and what new information that 

BLM relied on that led them to change the original terms? 

Ms. HANKINS. Unfortunately, Representative Lamborn, I cannot 

address that question because I was not involved in those discussions. However, I will be happy to provide a written response to the 

Committee on that question. 

Mr. LAMBORN. OK. I would really appreciate that answer in writing later. 

Mr. Johnson, would you have anything to add to that? 

Mr. JOHNSON. No, I don’t. 

Mr. LAMBORN. OK. Well, Ms. Hankins, going on to the next question, in April of this year, BLM announced plans to re-review the 

2008 programmatic environmental impact statement—we referred 

to that earlier—for the development of oil shale resources. Can you 

tell us what substantive new information has been brought to your 

attention that warrants an entire re-review of a barely 3-year-old 

document that is very lengthy—2,000 pages already and—well, I 

will have a follow-up. But first of all, that part of the question. 

What new information came to you that you felt it necessary to rereview the PEIS? 

Ms. HANKINS. The Secretary of the Interior has the discretion at 

any time to review previous decisions—in this case, an allocation 

decision relating to which lands might be available for development 

of oil shale. And it is an authority that he has. 

In this particular case, I think there are a number of factors that 

were considered. One is that because this is an industry that is 

still in its infancy, it was thought to be a good idea to evaluate 

whether we have new information about new technology, about economic viability of some of that technology. 

Also there has been a report released about the need to look at 

some of the water issues, which I alluded to in my testimony. That 

report was published by the General Accounting Office. And there 

are other concerns relating to sage grouse and great concern about 

their potential listing as an endangered species range wide across 

11 Western States. New information has come forward on some of 

their habitat and priority use areas. 

In addition, new information is available on some plants that are 

potentially threatened and endangered. So, for all of those factors, 

as well as concerns raised in litigation in 2009 challenging the 

2008 PEIS and regulations, all of those things are factors in why 

the Secretary has decided to take a second, fresh look at these 

issues while the industry is still in its infancy. 

I might add that this new look will not affect the six existing 

leases. They will still proceed on the course that they are on. 

Mr. LAMBORN. All right. Thank you. 

At this point, I would like to recognize Representative Tipton for 

questions. 

Mr. TIPTON. Thank you, Congressman Lamborn. 

And Ms. Hankins, thank you for being here. Good to see you 

again. 

Ms. HANKINS. Always. 

12 

Mr. TIPTON. Appreciate your testimony. When we look at some 

of the real challenges we face as a country, it is energy. We also 

have some of the issues in terms of what are called rare earths. 

And perhaps Mr. Johnson, with a little bit of backup on this, may 

be able to speak to that. 

Has the BLM explored some of the rare earths that may also be 

available out of the oil shale? 

Ms. HANKINS. I don’t have information to address that question. 

But I would be happy to provide information after the hearing. — 

Mr. JOHNSON. There have been studies in the past of elements 

within the oil shale itself, and I don’t have those with me. But 

there may be some minor amounts of rare earth in oil shale. We 

could provide that later. 

Mr. TIPTON. You know, that might be something that we really 

want to explore in terms of looking at the entire package of resource development. It is my understanding and there is the potential to have aluminum, lithium, a variety of different elements that 

may be in there in addition to the oil shale, and those are all, obviously, some important issues for America as well, since we are now 

relying primarily on the Chinese for a lot of the rare earths since 

we have closed down a lot of the mining industry in this country, 

to be able to develop those resources. 

So I would appreciate some follow-up information on that. I think 

that that is important in terms of having the entire universe of information and looking at where we are heading. 

Ms. Hankins, maybe you can give us just a little bit of background. I grew up here on the West Slope, and I remember looking 

out at Grand Junction, we saw some of the boom and bust cycle 

when we had Unocal, when we had Occidental Petroleum, I think, 

coming in and trying to establish some of that early development 

for oil shale. 

Can you tell me what steps that you are observing, since you are 

working with the industry and we have six leases that seem to be 

proceeding right now in the process, what are some of the steps 

that are being taken to be able to avoid that boom/bust cycle? 

Ms. HANKINS. I think one of the reasons that we are undertaking 

this new programmatic environmental impact statement is to provide us yet another opportunity to look at not only the resource and 

how it might be developed, but also to look at concerns related to 

socioeconomic impacts, infrastructure development, et cetera, of 

such a possible development. One of the opportunities that we have 

in this sort of process is to make recommendations for what might 

assist with making sure that we minimize the boom/bust cycle. 

Of course, that is not entirely within the control of the Bureau 

of Land Management. But we have an opportunity to look for mitigation options as we look at economics as part of our analysis, and 

I think it remains to be seen what those recommendations will be. 

But we can address that in our process. 

Mr. TIPTON. OK. Great. You know, really, one of the problems we 

are seeing, and we have discussed it before, one of the big challenges, it seems, to having real economic development and we will 

again underscore, as you noted in your testimony, and we want to 

make sure that things are being done responsibly. But we have 

heard that regulatory uncertainty is really one of the main factors 

13 

that is delaying research and technological development of oil 

shale. 

Could you maybe speak to that? And has BLM or others that you 

may be aware of, have we done any sort of cost-benefit analysis in 

terms of continually moving the goal posts, if you will, in terms of 

addressing developing resources responsibly? 

Ms. HANKINS. Well, as I mentioned a few minutes ago, the current effort to relook at the land allocation decisions in 2008, the 

PEIS in 2008, and the regulatory efforts that were also completed 

at the same time, look at economics and they consider a lot of these 

various things. But one thing that they don’t do in our new effort 

is our new effort does not affect the current research and development that is going on on these six leases, five in Colorado and one 

in Utah. 

And the purpose of these leases is, of course, for research and development. Nor are things that we are doing on Federal land affect 

the ability of companies to do research and development and evaluate various techniques on private land. So I think that our current 

efforts to look at land allocation and to look at the rules that we 

have in place to make sure they are environmentally responsible 

really don’t preclude research and development on either the existing Federal leases or on private land. 

Mr. TIPTON. Well, yet when we are talking about those five 

leases that are currently in Colorado, one in Utah, and they have 

some certainty, can you give me some kind of a timetable that they 

are working off of, actually, for that RD&D? 

Ms. HANKINS. I believe that they are 10-year leases. But each 

company has to determine its own timetable based on its development, plan of development and the steps that are in that plan. 

Each one, of course, is unique, so there is not a set timeframe for 

when that development will occur. 

Mr. TIPTON. So I guess it is my understanding then that, obviously, we can introduce some sort of caveat in there that may 

change a bit over this 10-year period. The BLM is giving some certitude in terms of the regulatory process for these companies in 

terms of developing the oil shale. Is that correct? 

Ms. HANKINS. The companies that have the six leases—five in 

Colorado and one in Utah—will be given a choice. At such time, if 

they arrive at the time, when they want to convert these RD&D 

leases to commercial leases, they will have the opportunity to 

choose whether they wish to operate under the existing regulations. 

Or if there is a different set of regulations at that time, they can 

opt to choose that. But the choice is theirs which way they want 

to go. 

Mr. TIPTON. Thank you. I yield back. 

Mr. LAMBORN. OK. And then, if you would indulge us for some 

follow-up questions? 

Ms. Hankins, you said you were not part of the decision-making 

on the lease changes. Can you tell me, do you think that the 

changes made for RD&D leases are more—would make the goals 

of the RD&D leases more or less difficult to achieve? 

Ms. HANKINS. You know, I think it is important that I talk about 

what—the areas where I have authority to make decisions and to 

operate. And as the State Director of BLM, my responsibilities are 

14 

to evaluate proposals that come forward for any types of energy development, and of course, I do that through our field managers and 

district managers. 

That is really my role in terms of oil shale. BLM participated in 

both round one and round two with other agencies, including representatives of State government from the three States—Colorado, 

Wyoming, and Utah—to look at proposals for RD&D nominations 

and participated in the approval of those leases for the first six, as 

we will in the next three. My responsibility is to deal with field 

issues and permitting or leasing of field activities. 

Mr. LAMBORN. Well, along those lines, is BLM doing anything to 

make sure that there is some kind of regulatory certainty for the 

companies that may wish to invest large sums of money, and this 

could affect many jobs here in Colorado as well, as well as possible 

energy production that would help the whole country? So what is 

BLM doing to ensure that there is some kind of stability or certainty going forward? 

Ms. HANKINS. I think it is important to talk about that in the 

context of where we are with the oil shale industry, and you know, 

we are yet many years away from a commercially viable, environmentally approved oil shale development project. And why I mention that is that it provides us some time to evaluate carefully not 

only which lands we make available, but which rules we choose to 

employ as a nation to manage our oil shale development. 

In the case of the existing RD&D leases, there is certainty. As 

I mentioned, those companies know what the regulations are under 

which they are currently operating. They know what the royalty 

rates are. They know what the environmental concerns are of the 

Government. And so, I believe that they have certainty, and they 

can choose to stay on the path they are on with the existing regulations and royalty rates. 

For those companies that are in the—potentially in the pipeline 

to receive other leases in round two, of course, they will have to 

evaluate how to move forward based on what comes out in the rulemaking next year. But that is not uncommon in how the Bureau 

of Land Management and the Department of the Interior manages 

minerals in general. 

We have been addressing mineral exploration and development 

on public land since the mid 1800s, and since that time—150 years, 

more or less—there have been many examples of us evaluating 

whether or not we have appropriate environmental protection 

measures in place, whether we have appropriate royalties in place 

to ensure appropriate return to the American people. 

So the process of reviewing and evaluating how we regulate industry is not new. It is part of our responsibilities as we take care 

of these public lands for all American people. But I think there is 

certainty for those who have existing RD&D leases. I think that 

the three that are in process, certainly they do know that we are 

in this review process, and it is part of how we manage minerals. 

Mr. LAMBORN. Now, Ms. Hankins—and thank you for your answers—you are here as the BLM Director for Colorado. You are the 

Administration’s witness, in effect, and you are also speaking indirectly for the Secretary of the Department of the Interior. Are you 

saying that you really don’t have an opinion on how these recent 

15 

changes will have an impact on the possible commercial use of oil 

shale in the future? 

Ms. HANKINS. I think, as I said, the Secretary of the Interior has 

broad authorities, and he has the discretion, based on a variety of 

inputs that he gets, on when he feels it is appropriate to reevaluate, reexamine, or take a new look at both land allocation decisions 

and regulatory requirements that an agency—in this case, the 

BLM—might wish to impose. 

I believe that he is well within his prerogative to ask us to do 

this additional review, and I think as part of that, we need to look 

at environmental issues, economic issues, and make sure that the 

look we did 3 years ago is—a little bit longer than that—is still 

valid or whether we want to make some adjustments. So I believe 

we are on the right track, and I think it is important that we be 

open to new information about new technology, new environmental 

issues, water concerns, et cetera. 

Mr. LAMBORN. Well, Ms. Hankins, I have no doubt that he has 

the authority to do this. You have stated that several times. I totally agree. I am curious as to whether this decision is going to 

have a negative impact on the research and development that we 

are hoping takes place so that we all know what is going to happen 

in the future, if anything. 

Ms. HANKINS. Well, as I said, the existing RD&D leases are not 

affected by this ongoing planning effort or by the regulatory review. 

And so, those companies can continue, as they have been for some 

time, on their Federal leases and on private holdings that they 

have. 

I cannot predict how this new effort might affect future endeavors because we are still very early in the process. We are some time 

away from even having a draft document. So, it is not possible for 

me to speak to what it might address or what an ultimate decision 

might be more than a year from now. 

Mr. LAMBORN. OK. My last question is in your discussions with 

your colleagues in Utah, is there any different approach on the 

Utah side of this basin to RD&D leasing, compared to Colorado? 

Ms. HANKINS. I am not intimately familiar with the activities in 

Utah. They are looking at a more, if you will, a traditional approach. My understanding is they are looking at more traditional 

mining methods as a means of extracting the oil shale and then 

using surface retort. Whereas, in Colorado, the proposed methods 

relate more to in-situ heating of the oil shale and then extracting 

the mineral after that point. 

However, the leases in Utah, the RD&D leases, are under the 

same requirements as they are here in Colorado in terms of Federal law and regulation. So I would not expect them to be different 

in that regard. The regulations in the State of Utah under State 

law are different than Colorado, but I can’t speak to that. 

Mr. LAMBORN. OK. Thank you. 

Representative Tipton? 

Mr. TIPTON. Thank you, Congressman Lamborn. 

I just have, I think, one follow-up question. Can you kind of clarify for me when you noted in your opening comments that there 

was, I believe you stated, 4.3 trillion barrels of oil potentially between Colorado, Utah, and Wyoming. Is it the BLM and the AdVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
16 

ministration’s position that this is a resource that ought to be developed? 

Ms. HANKINS. You know, I don’t have detailed knowledge of the 

grade, character, ability for extraction, and many other factors 

about all of those deposits. So it is difficult for me to really say 

should they all be developed because there are many, many variables in terms of surface resources that might have to do with endangered species. It might have to do with water quality and quantity. It might have to do with, is it reasonably and economically extractable because of the topography, the amount of overburden, and 

other variables? 

So I don’t think I really can definitively say for that 4.3 trillion 

barrels of oil in place how much is readily available or should be 

available at this point in time because there are too many factors 

I don’t know the answer to. 

Mr. TIPTON. I guess my question, actually, it is a little more refined than the broader context of it. It is just on a philosophical 

basis, recognizing the energy needs of this Nation—the energy 

challenges that we face, what is happening on the worldwide 

level—is it the Administration’s belief that this is a resource that 

we should be developing in this country? 

Ms. HANKINS. I think that there are a couple of responses to 

that. Secretary Salazar has said in his policy statements and his 

areas that he expects the agencies to emphasize that energy development is one of his key priorities, and it is going to be some time 

before we have a viable renewable energy industry in the United 

States that produces significant amounts of energy for us. 

I believe I read recently that the President’s goal is that by 2025, 

we are able to get 25 percent of our energy from renewable sources. 

But even if we are able to meet that goal, the amount of energy 

that we are going to need to get from conventional sources—particularly oil, natural gas, and coal—will still be significant for years 

to come. When we are able to have commercially viable and environmentally responsible development of oil shale leases at some 

point in the future, which I understand from industry is still some 

years away, that also will be able to be one of our sources for domestic energy. 

However, having said that, it is important to talk about BLM’s 

underlying mission, and that is a mission of multiple use. And so, 

the public lands that BLM manages generally are used based on 

decisions that we make in our land use plans, and those land use 

plans consider a variety of management objectives, which include 

watershed health, wildlife habitat, as well as energy development. 

So, in general, we would likely not make a determination about 

energy development without taking into account other surface values and resources that are important to all of us and that you all 

addressed in your opening remarks. Clearly, energy is on the Secretary’s agenda. It is a top priority for him, as it is for BLM. Oil 

shale is one component of that, but not the only component. 

Mr. TIPTON. Great. Well, appreciate that. Well, I think we certainly ought to be probably submitting the question to the Secretary’s office as well because we were kind of on both sides of that. 

We want to develop it, but maybe not—and I understand where 

you are coming from in that regard. 

17 

But I think that what it probably also speaks to when we are 

talking about economic viability, as I was listening to your answer, 

I heard probably from a development standpoint, a lot of uncertainty that is going to be accompanying in terms of the significant 

investment that developing a resource actually takes, to be able to 

do that. I don’t know if you are going to be in contact with the Secretary. We will certainly submit a letter. 

But I think we do need to have some real clarity if there is going 

to be a real commitment to developing resources, given the challenges that we have because I think the industry deserves to be 

able to understand what those economic challenges are going to be 

as well. 

So thank you, and I yield back. 

Mr. LAMBORN. All right. I want to thank Ms. Hankins for being 

here. 

The members of the Committee may have additional questions 

for you. We would ask that if we submit those to you in writing, 

that you respond to us in writing. 

Mr. LAMBORN. Thank you for being here today, and thank you 

for giving us your valuable time. 

Ms. HANKINS. Well, thank you for the opportunity to be here. 

Mr. LAMBORN. You are welcome. 

Now I would like to invite the second panel to come forward. It 

consists of Mr. Michael Hagood, Director of Program and Regional 

Development of the Idaho National Laboratory; Dr. Thomas 

Sladek, Director of Ockham Energy Services; Ms. Jennifer Spinti, 

Research Associate Professor, Department of Chemical Engineering 

and Institute for Clean and Secure Energy of the University of 

Utah; and Ms. Anu Mittal, Director of Natural Resources and Environmental Division of the Government Accountability Office. 

Thank you all for being here. As you are getting situated, I 

would just like to remind you that like all of our other witnesses, 

your written testimony will appear in full in the hearing record. So 

I ask that you keep your comments to 5 minutes, as outlined in the 

invitation letter. 

The microphones are automatic. So you don’t have to turn them 

on. You will see the lights turn yellow at 4 minutes and red at 5 

minutes. 

I want to thank you for being here. And we will start in the 

order of which I introduced you earlier. 

So, Mr. Hagood, you may begin. Thank you. 

STATEMENT OF MICHAEL HAGOOD, DIRECTOR, PROGRAM 

AND REGIONAL DEVELOPMENT, IDAHO NATIONAL 

LABORATORY 

Mr. HAGOOD. Chairman Lamborn, Congressman Tipton, and 

members of the Subcommittee, thank you for the opportunity to 

testify before the Subcommittee. 

My name is Michael Hagood, and I represent the Idaho National 

Laboratory as the Director of Program and Regional Development. 

Idaho National Laboratory is one of several U.S. Department of 

Energy laboratories. We are an applied research energy systems 

laboratory with interest in looking at the development of a number 

of energy sources, including nuclear, fossil, and renewables. And 

18 

we also work with advanced transportation, such as electric vehicles. 

And as part of this portfolio, we also engage in research associated with unconventional fossil energy sources, including oil shale. 

I will limit my comments today more along the lines of the research associated with oil shale development. It is based on history, 

technological innovation and associated investment will emerge to 

more effectively develop oil shale resources. 

Research has been and will continue to be a critical component 

in successful development of such unconventional fossil energy resources, including oil shale. An example is the recent impact of horizontal drilling, fracking, and use of proppants in accessing and recovering natural gas from shale. 

Another example is the innovative subsurface steam injection recovery process implemented to help unlock Alberta oil sands at 

depth. And on that foundation, a number of other innovations have 

been developed associated with the development of those resources, 

as well as dealing with environmental consequences. 

Increasingly, research is also playing a role in better understanding the interdependencies between energy and the environment, the impacts of energy development on the environment, and 

ultimately the development of innovation that helps mitigate environmental impact. So relative to the concerns on water, research 

plays a role in understanding the baseline conditions with groundwater, surface water in the area associated with oil shale. It also 

looks at the potential impacts, but it is also associated with developing innovation that helps address and mitigate some of those impacts. 

The United States should continue to pursue smart and environmentally responsible development of oil shale. Realizing a sizable 

oil shale industry can contribute significantly to U.S. energy security, but its establishment and impact could take several years. 

Along these lines, it is recommended that in the near term, steps 

be taken to implement recommendations made by the Unconventional Fuels Task Force, which was put together as a result of the 

Energy Policy Act of 2005, Section 369. 

As a result of the findings from that task force, a strategy was 

developed by an ad hoc group to create an unconventional fuel 

strategy, which included addressing some of the challenges associated with the environment, including looking at the groundwater 

and surface water issues associated with oil shale. 

Relative to supporting this endeavor, it is recommended to establish a regionally based, long-term integrated and focused applied 

research program that helps accelerate identification of the challenges and issues and implementation of solutions that would be 

impactful in a smart and environmentally responsible development 

of oil shale resources. It is also recommended that such a program 

leverage the rich research capabilities within the region and internationally. 

The size of the oil shale resources, the magnitude, the richness, 

and the impact on the energy security of the United States is such 

that this deserves greater attention. 

Thank you. 

[The prepared statement of Mr. Hagood follows:] 

19 

Statement of Michael C. Hagood, Director, Program and Regional Development, Energy and Environment Science & Technology, Idaho National 

Laboratory 

Introduction. Chairman Lambourn, Congressman Tipton, and members of the 

subcommittee, thank you for the opportunity to testify before the subcommittee. My 

name is Michael Hagood and I represent the Idaho National Laboratory. I have over 

thirty years of experience working in the fields of energy and environment, including participating in associated research, development and demonstration programs. 

I have BS and MS degrees in the field of geology and am a licensed geologist and 

hydrogeologist. I have been with Idaho National Laboratory since 2003 and am responsible for developing science and technology and regional programs for the Energy and Environment Directorate. My testimony today will touch upon western oil 

shale development and its potential impact on U.S. energy security and economy, 

however, the emphasis of my testimony will be on relevant research. 

Idaho National Laboratory Background. Idaho National Laboratory (INL) is 

a science-based, applied engineering U.S. Department of Energy (DOE) laboratory 

dedicated to supporting missions in energy research, science, and national defense. 

INL has a long history in energy resource evaluation, energy systems analysis and 

integration, and system-of-systems engineering, coupled with a technical focus on 

advanced modeling and simulation, computational engineering and analyses, instrumentation and controls, and materials development and testing. INL addresses research in nuclear, fossil and renewable energy, advanced transportation and energy 

storage, as well as critical energy infrastructure protection. In particular, INL is 

known for conducting demonstrations to help reduce risks associated with deployment of technology and being an honest, independent broker of technical information. 

Idaho National Laboratory also has a goal to assist in addressing regional U.S. 

energy and environment challenges. From this perspective, INL has taken a particular interest in energy resource development in the Western Energy Corridor, including the rich oil shale resources located in Colorado, Utah and Wyoming. INL 

has been engaging in oil shale research, supporting the U.S. Department of Energy 

and industry for several years, as well as investing in unconventional fossil energy 

research internally. INL partners with regional universities relative to energy and 

environment research, including with Colorado School of Mines, University of Utah, 

Utah State University Bingham Research Center, and University of Wyoming. INL 

has also developed technical relationships with Canadian research institutions in 

Alberta and Saskatchewan, which have challenges and capabilities relevant to oil 

shale development. 

Western Oil Shale and Energy Security. The world class nature of western 

oil shale resources is measured in magnitude, longevity and strategic import to U.S. 

energy security. It is the largest hydrocarbon resource on earth and on a per acre 

basis is the most concentrated oil bearing resource on earth. The United States is 

expected to continue to rely heavily on oil through at least 2035 according to the 

U.S. Energy Information Administration and one would expect U.S. dependence to 

extend much beyond this. In the meantime, the U.S. will need to pursue securing 

access to reliable supplies of energy and at the same time lessen its dependence on 

politically and economically unstable sources of oil imports. Given this situation, 

western oil shale can play a substantial role in contributing to U.S. energy security. 

Western Oil Shale and the Economy. Development of a substantial industry 

around western oil shale can lead to significant regional job creation as well as help 

reduce the flow of dollars being sent overseas to purchase oil. As western oil shale 

becomes officially recognized as a secure, known and long-term source of oil reserves, the creation of an oil shale industry would result in significant national and 

international investment. As an example, I would point to what has transpired in 

Alberta associated with oil sands development. 

Western Oil Shale and Research. As world oil demand and prices continue to 

rise there will be increasing efforts to develop more of the unconventional fossil energy resources, such as oil shale. In parallel, technological innovation and associated 

investment will emerge to more effectively develop these resources. Research has 

been, and will continue to be, a critical component in successful development of 

these unconventional fossil energy resources. An example is the recent impact of 

horizontal drilling, fracking and use of proppants in accessing and recovering natural gas from shale. Another example is the innovative subsurface steam injection 

and recovery process implemented to help unlock Alberta oil sands at depth. Increasingly, research is also playing a role in better understanding the interdependencies between energy and the environment, the impacts of energy development on 

20 

the environment and ultimately the development of innovation that helps mitigate 

environmental impact. 

Congress recognized the importance of unconventional fossil energy research 

when they passed the Energy Policy Act of 2005 (Act). In particular, Sec 369 of that 

Act focused directly on promoting the development of liquid fuels from the Nation’s 

vast unconventional hydrocarbon resources, including oil shale, and directed the 

study and mitigation of technical impediments to unconventional fuels development. 

Oil shale research being conducted today addresses a variety of topics, many of 

which are profiled in U.S. DOE’s ‘‘Oil Shale Research in the United States’’. Research is being conducted to better understand the nature of the oil shale resource 

itself as well as its setting. A number of these projects are also focused on realizing 

a better understanding of specific and cumulative impacts on the environment. A 

significant need in the future is to further address oil shale development impacts 

on green house gas emissions, water use and quality, and air quality concerns. For 

example, INL is conducting modeling and bench-scale tests in an effort to better understand potential impacts of in situ heating of oil shale on groundwater quality. 

Oil shale recovery and retort processes are also a major research focus, and there 

are several approaches being advanced. These processes exist at various levels of 

maturity and many are still in the research and development phase. A summary 

profile of these approaches can be found in U.S. DOE’s report ‘‘Secure Fuels from 

Domestic Resources: The Continuing Evolution of America’s Oil Shale and Tar 

Sands Industries’’. A particular trend in such research is addressing in situ oil shale 

retorts at depth. Another emerging research interest relates to reducing the energy 

requirements associated with oil shale development and the potential integration of 

renewable and nuclear energy, which have the potential to help extend the lifetime 

of the oil shale resource and reduce green house gases. 

Research on western oil shale is being conducted by a number of regional universities, state and federal agencies, national laboratories and private industry. University and research laboratories working in this area include Colorado School of 

Mines, University of Utah’s Institute for Clean and Secure Energy, Utah State University Bingham Research Center, Los Alamos National Laboratory and Idaho National Laboratory, along with sponsorship through the National Energy Technology 

Laboratory. Regional federal offices and state agencies such as U.S. Geological Survey and Utah Geological Survey are also contributing to assessing oil shale resources and their environmental setting. Private industry, primarily comprising 

larger companies, is investing significantly in research built around recovery and 

processing techniques. Relative to industry between 2007 and 2010 DOE identified 

twenty-nine private companies engaged in research and development. 

Of special note, the Department of the Interior’s Bureau of Land Management 

(DOI/BLM) has been advancing opportunities for oil shale (and tar sands) technology research and demonstration on Federal lands in the West through the Oil 

Shale Research Development and Demonstration (RD&D) Leasing Program. A first 

set of leases have been allocated to Shell, Chevron, American Shale Oil and Enefit 

American Oil (formerly OSEC). Nominations for a second set of RD&D leases are 

currently under review, with BLM recently announcing their reviews of three candidates for leases in Colorado and Utah. 

Relevant research on oil shale is also occurring internationally. Companies which 

are assessing the application of their technologies to western oil shale are also conducting technology demonstrations elsewhere in the world. Technology transfer associated with already demonstrated, conventional oil shale retort operations have 

also emerged with the intent that these may be applied to western oil shale, including technologies derived from Estonia, Brazil, and even China. In this spirit, the 

U.S. has recently signed a cooperative research agreement with the republic of Estonia. 

International technology transfer was recognized by Congress, as per Section 369 

(h) of the Energy Policy Act of 2005, in which the Congress directed the Secretary 

of Energy to establish the Unconventional Fuels Task Force to ‘‘make recommendations with respect to initiating a partnership with the Province of Alberta, Canada 

for the purpose of sharing information relating to tar sands. Although focused on 

tar sands (oil sands), the associated innovation and ‘‘lessons learned’’ in Alberta is 

useful in addressing oil shale development approaches and impacts. 

Oil shale research can result in direct job creation in private industry, regional 

research institutions and government agencies. The greater long-term positive impact on the economy, however, will be realized through the ultimate deployment of 

innovation that in turn helps realize substantial oil production in an environmentally responsible manner. Once a substantial oil shale industry is established 

in the region, accompanied by a healthy market place, one would also expect greater 

investment in, and contribution from, aligned research efforts that would bring adVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
21 

ditional economic benefits. For example, with a set of more mature R&D relationships in the region, innovation would result in creation of spinoff companies and 

services, which would lead to creation of jobs. A rich environment comprising industry, education, research and sound policy will lead to large international investment, 

similar to what is being experienced with the oil shale industry in the United 

States. 

Recommendations. In view of its size, value and longevity, western oil shale deserves greater attention. It is of international scale. The United States should continue to pursue smart and environmentally responsible development of these resources. Realizing a sizeable oil shale industry can contribute significantly to U.S. 

energy security, but its establishment and impact could take several years. Along 

these lines, it is recommended that in the near term, steps be taken to implement 

recommendations made by Unconventional Fuels Task Force. A strategy was proposed by the Unconventional Fuels Ad Hoc Working Group in 2008 to address these 

recommendations, and developed an approach for further advancing development 

within the Western Energy Corridor, with an initial emphasis placed on oil shale. 

Relative to oil shale research, it is recommended to establish a regionally based, 

long-term integrated and focused applied research program that helps accelerate 

identification and implementation of solutions that would be impactful in the smart 

and environmentally responsible development of oil shale resources. It is also recommended that such a program leverage the rich research capabilities within the 

region and internationally. 

When aligned with a healthy oil shale industry, research on western oil shale can 

lead to even greater economic development within the region, sustainable over this 

century. As witnessed in similar circumstances elsewhere, research can also lead to 

strengthening existing U.S. competitiveness, nationally and internationally. Beyond 

this, there is also the opportunity to identify and establish value added industrial 

enterprises built upon the oil shale energy platform. 

REFERENCES 

Idaho National Laboratory. June, 2011. Western Energy Corridor 

Task Force on Strategic Unconventional Fuels. Annual Report, December 2009 

Task Force on Strategic Unconventional Fuels. September 2006. Development of 

America’s Strategic Unconventional Fuels Resources. Initial Report to the President and the Congress of the United States 

U.S. Department of Energy, Office of Petroleum Reserves, Office of Reserve Lands 

Management, September 2010. Oil Shale Research in the United States: Profiles of Oil Shale Research and Development Activities in Universities, National 

Laboratories, and Public Agencies, Second Edition: September 2010 

U.S. Department of Energy Office of Petroleum Reserves Office of Reserve Lands 

Management, Fourth Edition: September 2010. Secure Fuels from Domestic Resources: The Continuing Evolution of America’s Oil Shale and Tar Sands Industries—Profiles of Companies Engaged in Domestic Oil Shale and Tar Sands Resource and Technology Development: 4th Edition: September 2010 

Ad Hoc Unconventional Fuels Working Group: U.S. Department of Energy, Office 

of Naval Petroleum and Oil Shale Reserves, November 2008: Strategic Plan— 

Unconventional Fuels Development within the Western Energy Corridor 

National Oil Shale Association. Oil Shale Update, May 2010: http:// 

www.oilshaleassoc.org/documents/FinalUpdateMay2010.pdf 

Mr. LAMBORN. I want to thank you for your testimony. 

Dr. Sladek? 

STATEMENT OF THOMAS SLADEK, PH.D., 

DIRECTOR, OCKHAM ENERGY SERVICES 

Dr. SLADEK. Thank you. Thank you, Congressman. I appreciate 

the opportunity to be here. 

I always look forward to coming to Grand Junction, especially 

during the peach season. I intend to go back to Lakewood this 

afternoon pursued by a cloud of fruit flies. 

[Laughter.] 

Dr. SLADEK. I have been involved in oil shale off and on since 

1967. And although much has changed in the world since then, oil 

shale development in the United States still confronts many of the 

22 

same concerns—access to resources, production costs, environmental and social effects, water availability, and uncertainties 

about future oil prices. Other countries are facing most of the same 

issues as their industries emerge. 

I would like to summarize the work underway in those countries 

and attempt to relate that experience to the potential emergence of 

an American industry. There are oil shale-producing industries in 

three countries right now—China, Estonia, and Brazil—and another country, Jordan, is moving very rapidly toward creating an 

oil shale industry. Rapidly, but somewhat erratically. Their recent 

progress has been impeded by the political unrest in the Middle 

East, and when they get by that, they’ll get back to business, I 

guess. 

China has produced shale oil since the 1930s, when Japan invaded Manchuria and began to extract oil to fuel their military machine. China now has one large oil plant and six small ones and 

two plants that make electricity from oil shale. Four oil plants and 

two power plants are under development. 

Estonia has utilized oil shale as a source of power and oil since 

the early 20th century, and today, nearly all of Estonia’s electricity 

is produced from oil shale. They also export large quantities of electricity to the surrounding countries and their power grids. Two Estonian companies currently produce oil and power from oil shale, 

and their plants are being expanded. 

One company, Eesti Energia, is also active in Jordan and the 

United States. The Hashemite Kingdom of Jordan has agreements 

with eight prospective developers to produce cement, shale oil, and 

electric power from oil shale. Eesti Energia’s agreement could result in the largest shale oil plant in history, plus the plant to make 

most of the country’s electricity. 

Although Brazil is not expanding its domestic oil shale industry, 

the national oil company Petrobras is involved in projects in Jordan, the USA, Morocco, and China. Turkey imports more than 90 

percent of its fuel oil and gas and has considered developing its oil 

shale to reduce that dependence. 

There are some interesting opportunities. One small deposit 

yields up to three barrels of oil per ton of rock. Very unusual material in the world. 

Morocco has a memorandum of understanding with Petrobras 

and Total. Syria, before their political unrest, had signed an agreement with Jordan to share expertise in the development of electricity from oil shale. Egypt was examining the feasibility of developing its oil shale to conserve the country’s economically important 

oil and natural gas reserves. I suspect that has been suspended as 

well. 

Resource surveys and field exploration studies are underway in 

Canada, Thailand, and other places. There is a cement plant in 

Germany that makes cement from oil shale. And in Sweden, tests 

on the alum shale continue to determine the feasibility of recovering oil, uranium, nickel, molybdenum, vanadium, and probably 

rare earths if they are there. 

Some very interesting work is underway in Australia, where a 

company from Rifle, about 60 miles east of us, called Shale Tech 

International, recently completed a large pilot plant which will use 

23 

the Paraho returning process to make liquid fuels from Queensland 

oil shale. Paraho is American technology. It was developed in Colorado to use oil shale from the Green River formation, and now it 

is being used in Australia. 

All of these activities are very relevant to the future of an oil 

shale industry in the United States. Like the U.S., nearly all of the 

other countries that are working on oil shale consume much more 

oil than they produce. A few have essentially no indigenous fuel 

production and are totally dependent on imports with the attendant economic dislocations and security problems. 

Many have small populations and economies and would have difficulty raising billions of dollars to pay for integrated oil shale 

plants, despite their potential economic benefits in the long term. 

The oil shale projects in other countries are relevant to the U.S. because they will advance understanding of the processing technologies and reduce risks associated with their deployment. 

A very important benefit will be the validation of high-level engineering designs and cost estimates. Although the plants in the current and proposed industries are relatively small compared with 

what might be supported by the Green River oil shales, they are 

large enough to address many of the unknowns that must be confronted by promoters of the commercial industry. This is especially 

important for the retorting facilities, which are expensive to build 

and operate. 

The growing body of operating experience and information will 

greatly reduce the risks associated with the commercialization 

phase. This progress will facilitate financing and permitting of a facility, which will ultimately mean lower product cost. 

These advancements are especially important, regardless of 

where oil shale technology is deployed next and especially if it is 

deployed in the United States. 

That completes my prepared statement. Any questions? 

[The prepared statement of Dr. Sladek follows:] 

Statement of Thomas A. Sladek, PhD, Director, Ockham Energy Services 

Introduction 

I started my first oil shale project in the fall of 1967, at the Colorado School of 

Mines, as part of my master’s program in the Department of Chemical and Petroleum Refining Engineering. I set out to measure thermal conductivity factors for oil 

shale in the Green River formation, the huge geological entity that underlies much 

of northwestern Colorado, northeastern Utah, and southwestern Wyoming. My work 

was sponsored by Sinclair Oil Company, which wanted to simulate the transmission 

of heat through beds of oil shale at their property overlooking the Parachute Valley 

in Colorado. Sinclair’s field tests in the 1950s were somewhat successful, and they 

were encouraged by high oil prices (almost $3 per barrel and holding) to try again. 

Sinclair called its process ‘‘underground retorting’’ or ‘‘retorting in place.’’ The currently popular phrase in situ was provided later, by Latin scholars. 

After graduate school, I worked in a steel mill and then on oil shale, coal conversion and tar sands processing, fuel alcohol from corn, oil shale, resource recovery 

from municipal waste, management of scrap tires and other special wastes, domestic 

independent power projects, waste-to-energy facilities, recycling and solid waste 

composting, international power projects, gas-to-liquids technology, recovery of energy from agricultural residues, hybrid power plants, and oil shale. 

In 2007 and 2008, I was principal investigator and director of the Jordan Oil 

Shale Technical Assistance project. My colleagues and I conducted a feasibility 

study for development of the oil shale resources in The Hashemite Kingdom of Jordan and prepared a strategic plan for their commercialization. Work included reviewing the mining and processing technologies and industries under development 

in other countries and updating cost engineering studies from the 1970s to allow 

24 

forecasting of the product prices required to support an oil shale industry in Jordan. 

The client was Jordan’s Ministry of Energy and Mineral Resources. The prime contractor was Behre Dolbear and Company (USA) Inc. Funds came from the U.S. 

Trade and Development Agency, a branch of the Department of Commerce. 

In 2008 and 2009, I was engaged by the European Union to support the EuroMediterranean Energy Market Integration Project, or MED EMIP. My job was to 

develop a concept paper for creation of an oil shale council for the countries of Turkey, Syria, Jordan, Egypt, and Morocco. All of these countries have oil shale deposits and not much else in the way of indigenous fossil fuels. The council would allow 

them to share their experience, influence, and expertise and develop their resources 

in an orderly and beneficial manner. My work again included reviewing the status 

of oil shale technologies and projects in the Middle East, North Africa, and other 

regions and assessing the significance of that work for the council’s members. The 

project was successful in that an Oil Shale Cooperation Center was established in 

Amman in April of 2010. The future of that center is unclear, given the social unrest 

in its member countries. 

I would now like to describe what I learned about oil shale projects around the 

world and to highlight some of the implications of that work for the emerging oil 

shale industry in the United States. 

Oil Shale Projects in Other Countries 

People’s Republic of China 

In Liaoning Province, the Fushun Mining Group plant uses a large number of 

small retorts to make about 2 million barrels of oil per year from lump oil shale, 

plus bricks and cement from the ash. Installation of a large retort to handle fine 

oil shale was completed in 2010. The plant uses the Alberta Taciuk Process (ATP) 

technology which was developed for soil cleaning in Canada. FMG has announced 

plans to expand their capacity by 3 million barrels per year. 

In Jilin Province, Jilin Energy & Communication Corporation produces 12 MW of 

electricity by burning oil shale in fluidized bed boilers. Jilin Energy is developing 

a plant that will use Petrosix retorts to produce 1.5 million barrels per year of shale 

oil, 100 MW of electricity, and cement. Six other companies produce shale oil in Jilin 

Province. Quantities are relatively small. And Royal Dutch Shell has established a 

joint venture to evaluate the potential of Shell’s in-situ conversion process in the 

province. 

SINOPEC has proposed to build an oil shale power plant in Guangdong province. 

A retorting plant has been proposed for Heinan Province. In Heilongjiang Province, 

PetroChina is building a plant that will make about 700,000 barrels of shale oil per 

year, and a larger plant has been proposed by China National Coal Company and 

Harbin Coal Chemical Company. Several other minerals companies have proposed 

oil shale projects, some involving co-processing of oil shale and coal. 

Estonia 

Serious development of Estonia’s resources began after World War I, and today 

more than 12 million tonnes of oil shale is mined per year. More than 85% is burned 

to generate electric power. Retorting plants produce 1.6 million barrels of shale oil 

per year, mostly in descendents of the Kiviter and UTT retorts that were developed 

when Estonia was part of the Soviet empire. One of the big players is Viru Keemia 

Grupp AS (VKG), which operates a power station and two shale oil plants which 

process lump oil shale in Kiviter retorts. In December 2009, VKG commissioned a 

Petroter retort (a descendent of the UTT process) which produces 730,000 barrels 

of shale oil per year plus fuel gas and steam. VKG has a permit to pursue oil shale 

development in Ukraine. 

The other big player is Eesti Energia AS, the national power utility. Eesti Energia 

operates the Narva Oil Factory, which produces about 950,000 barrels of shale oil 

per year in two TSK140 retorts. These process fine oil shale and are also descendents of the UTT retorts developed in Soviet times. In 2009, Eesti Energia announced 

plans to expand its retorting capacity by more than 2 million barrels per year by 

2012. Production of fuel gas, steam, and electricity will also rise. In 2008, Eesti 

Energia and Finnish minerals processing company Outotec formed a joint company—Enefit—to develop oil shale processes and projects, especially in other countries. Enefit’s subsidiary Oil Shale Energy Jordan is developing a retorting plant 

and a large power station in Jordan. Enefit American Oil has acquired the Oil Shale 

Exploration Company project in Utah, which could, in time, produce 57,000 barrels 

of shale oil per day. 

25 

The Hashemite Kingdom Jordan 

Jordan’s deposits are located 60 to 90 miles south of Amman. They are large, have 

medium yield, and might be extracted with low-cost surface mining. The oil shale 

and the shale oil are very high in sulfur, which complicates combustion and retorting and makes refining difficult and expensive. These defects could be offset by selling the sulfur recovered during refining, because sulfur is a valuable commodity. In 

January 2000, sulfur sold for $3 per long ton along the west coast of the USA; in 

January 2011, the price was $180 per long ton. 

The Kingdom has no other significant resources of fossil fuel, and the government 

is committed to oil shale development. Since November 2005, the government has 

executed memoranda of understanding (MOUs): • With Jordan Cement Factories Company to manufacture cement from oil 

shale in the El Lajjun deposit • With Royal Dutch Shell to evaluate applying Shell’s in-situ process to deeply 

buried oil shale in central and southern Jordan • With Eesti Energia to evaluate using Enefit retorts to make at least 37,000 

barrels per day of shale oil and its boilers to generate at least 440 MW of 

electricity • With Jordan Energy and Mining Ltd. to investigate shale oil production using 

the ATP technology • With the International Corporation for Oil Shale Investment to evaluate retorting of oil shale from the El Lajjun resource in successors to the fine-shale 

and coarse-shale retorts developed in Estonia during the Soviet era • With Brazil’s national oil company Petrobras to examine application of the 

Petrosix retorting technology. The global energy company Total S.A. is participating. • With Russian firm Inter Rao and Jordan’s Aqaba Petroleum to examine using 

Russian technology for oil shale mining and shale oil extraction • With the International Company for Oil Shale Investment to evaluate development of the Attarat Umm Ghudran resource. 

The agreements cover both in situ retorting and aboveground processing in a diverse selection of retorts, with a range of potential production capacities, in several 

of Jordan’s oil shale areas. One agreement could produce a major power generating 

facility capable of meeting most of Jordan’s electrical demand, and one agreement 

provides for recovery of a valuable byproduct—Portland cement. With these agreements, Jordan is well positioned to become a major producer of shale oil. However 

there are restraints. In addition to the usual issue areas—economic feasibility, land 

disturbance, waste management, water requirements, and environmental, social, 

and cultural concerns—there is competition for access to the rock, some of which 

may contain uranium. 

Australia 

Australia has very large oil shale resources, principally in Queensland, and had 

oil shale industries of substantial size between 1865 and 1952. In June 1997, the 

Stuart Project was begun near the town of Gladstone in Queensland as a joint venture between Suncor Inc. of Canada and the affiliated Australian companies Southern Pacific Petroleum (SPP) and Central Pacific Minerals (CPM). Suncor subsequently departed, and SPP absorbed CPM. A demonstration plant using an ATP retort was constructed. The plant operated intermittently from 2000 to 2004, despite 

resistance from environmental, tourism, and fishing groups. Although the project 

had significant accomplishments, it had ongoing technical problems because dryer 

was too small. In February 2004, Queensland Energy Resources Ltd. acquired most 

of SPP’s assets, and Stuart was suspended. In August 2008, QERL announced that 

it was abandoning the ATP technology in favor of the Paraho II technology. The 

ATP plant was dismantled. 

QER processed 8,000 tonnes of Australian oil shale in the Paraho pilot plants 

maintained by Shale Technology International in Rifle, Colorado. In October 2009, 

QERL completed a feasibility study and began a campaign to restart Stuart with 

Paraho retorts. The first phase of that development was completed in August 2011, 

with commissioning of a small processing plant containing a single Paraho retort 

and its cadre of ancillary equipment, on the Stuart site. The plant can process about 

2.5 metric tons of oil shale per hour (vs. the 250 tonnes per hour capacity of the 

ATP retort). When it is fully operational, the plant will manufacture ultra-low-sulfur 

diesel fuel, jet fuel, fuel oil, and synthetic crude oil. 

Demonstration of the Paraho retorting process is particularly significant for oil 

shale initiatives in the American West. Reasons include: 

• Paraho is American technology, developed in Colorado to use oil shale from 

the Green River formation. 

26 

• Paraho’s history extends back nearly 70 years to the Synthetic Liquid Fuels 

Act of 1944, by which the U.S. Congress, in its wisdom, involved the Federal 

Government in development of the western oil shale resources. The Act led 

to a long series of pioneering tests on oil shale mining and retorting at Anvil 

Points in Colorado. The Gas Combustion retort was developed there. Its successor was the Paraho retort. 

• The Paraho retort was developed with emphasis on energy self-sufficiency and 

water conservation. These requirements are important in the remote, arid 

west. 

• Some of Paraho’s operating principles were embodied in the Petrosix retort 

and have been thoroughly tested in Brazil with the difficult Irati oil shale and 

with other unforgiving materials, such as scrap tires. 

• The QER project will rise on the site of a failed oil shale project which failed, 

in part, because of environmental controversy. QER is aware of the challenges 

in this area and seems to be dealing with them constructively. Similar controversy is likely to accompany any oil shale project in the U.S. 

Others 

Although Brazil is not expanding its domestic oil shale industry, the national oil 

company Petrobras is involved in projects in Jordan, the U.S.A., Morocco, and 

China. Turkey imports more than 90% of its fuel oil and gas and has considered 

developing its oil shale to reduce that dependence. There are some interesting opportunities (oil shale in one small deposit yields up to 3 barrels of oil per ton), but 

only a few deposits have been investigated in significant detail. Morocco has executed an MOU with Petrobras and Total to evaluate aboveground retorting of oil 

shale from the Tarfaya and Timhadit deposits and an MOU with San Leon Energy 

to investigate in situ development of portions of Tarfaya. Syria exports oil, but production is declining and the country is looking to its gas and oil shale deposits to 

maintain energy revenues. In 2009, Syria signed an MOU with Jordan to exchange 

expertise in producing electricity from oil shale. Before the Arab Spring of 2011, 

Egypt was examining the feasibility of developing its oil shale to conserve the country’s economically important oil and natural gas. Resource surveys and limited field 

exploration studies are underway in Canada, Thailand, and other places. The 

Holcim Cement plant in Dotternhausen, Germany, continues to make cement from 

oil shale. Tests continue on the alum oil shale in Sweden to determine feasibility 

of recovering oil, uranium, nickel, molybdenum, and vanadium. 

Significance for Oil Shale Development in the USA 

Oil shale activities in other countries are very relevant to the future of an oil 

shale industry in the United States. Like the U.S., nearly all of the other countries 

that are working on oil shale consume much more oil than they produce. A few (Jordan, Morocco, Turkey) have essentially no indigenous liquid fuel production and are 

totally dependent on imports, with the attendant economic dislocations and security 

concerns. Many have sensitive physical environments that could be damaged by 

poorly controlled and inadequately regulated mining and processing facilities. Many 

are water-poor and cannot divert water to supply oil shale plants and their associated populations without depriving other people and activities, especially agriculture. Many have small populations and economies and would have difficulty raising billions of dollars to pay for integrated oil shale plants, despite their potential 

economic benefits in the long term. 

Oil shale projects in other countries are also relevant to the U.S. because they 

will advance understanding of the processing technologies and reduce risks associated with their deployment. A very important benefit of the projects will be validation of high-level engineering designs and cost estimates. Although plants in the 

current and proposed industries are relatively small compared with what might be 

supported by the Green River oil shales, they are large enough to address many of 

the unknowns that must be confronted by promoters of a commercial industry. This 

is especially important for the retorting facilities, which are expensive to build and 

operate. In 2006, China’s Fushun Mining Group estimated it cost $18.46 to deliver 

a barrel of shale oil, with 75% of the cost associated with retorting, 23% with transportation, and less than 1% with mining. A failed retort could bring an entire plant 

down, and it could be very expensive to repair or replace. 

The growing body of operating experience and information will greatly reduce the 

risks associated with a commercialization phase. This progress will facilitate financing and permitting of a facility, which will ultimately mean lower product costs. 

These advancements are important regardless of where oil shale technology is deployed next, and especially if it is deployed in the U.S.A. 

27 

In short, the challenges faced by oil shale proponents in other countries are similar to those encountered in the United States: how to develop a practical, efficient, 

beneficial industry while protecting the environment and avoiding unacceptable social dislocations. It hasn’t been easy over there; it won’t be easy here. 

Ockham Energy Services 

Energy Efficiency Economy Ecology 

8820 W. Francis Place 

Lakewood, Colorado 80215 USA 

303 238 0785 TASLADEK@MSN.COM 

September 17, 2011 

Mr. Tim Charters, Staff Director 

Subcommittee on Energy & Mineral Resources 

1324 Longworth House Office Building 

Washington, DC 20515 

Dear Mr. Charters: 

I appeared before the Subcommittee’s oversight hearing on ‘‘American Jobs and 

Energy Security: Domestic Oil Shale the Status of Research, Regulation and Roadblocks’’ which was held in Grand Junction, Colorado, on August 24. On 

September 9, Representative Lamborn asked me, as a followup question, ‘‘Is there 

any more information on the important subject of rare earth elements in oil shale 

that was not discussed at the hearing?’’ This is my response. 

The rare earth elements (REEs) constitute 17 elements in the periodic table: the 

15 members of the lanthanide series—lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, 

terbium, thulium, ytterbium, lutetium—plus the elements scandium and yttrium. 

Many of the rare earths are important industrial materials. They are used as 

colorants and oxidizers and in lasers; batteries; permanent magnets; catalytic converters in automobiles; phosphors in televisions, monitors, lighting, and radar; metallurgical alloys; glass; catalysts for chemical production and petroleum refining; 

and medical technology such as X-ray, MRI, NMR, and PET. They have essential 

roles to play in the deployment of renewable energy technologies, especially wind 

and solar. Advanced storage batteries made with REEs help make electric cars more 

practical. 

REEs are a current concern because they are no longer produced in the United 

States. China is the principal supplier worldwide, and the reliability of the supply 

is uncertain. Interruptions could cause serious problems for numerous U.S. manufacturers. 

Few of the REEs are actually ‘‘rare’’ as such. The average abundance of cerium, 

for example, is about the same as for copper, and all of the REEs except promethium are much more abundant than gold or silver. However the REEs are dispersed through the earth’s crust and are seldom concentrated in easily exploitable 

deposits, as is often the case with other metals, including copper, gold, and silver. 

The rare earths are easy to find, because they are occur nearly everywhere. However they are hard to extract, because they are so diffuse, which makes them expensive. A pound of high-purity scandium, for example, currently sells for nearly 

$7,000. 

If some of the REEs were relatively abundant in the oil shale, their recovery as 

co-products with shale oil might make an oil shale project more economically attractive. With that possibility in mind, I examined a report on trace elements in the 

oil shale of Colorado’s Piceance Basin that was prepared in 1981 for USEPA by 

Lawrence Berkeley Laboratory and USDOE’s Laramie Energy Technology Center. 

Results are summarized in the attached table, which compares the maximum REE 

concentrations measured in the oil shale with average concentrations in the earth’s 

upper crust. 

Not all the REEs were assayed in the oil shale. Of those that were assayed, cerium is the only element with a higher concentration in the oil shale than in the 

crust, and that margin is only about 15%. Concentrations of the other rare earths 

are similar to concentrations reported for average rocks. These findings do not suggest the existence of a rare-earth bonanza in Colorado oil shale. 

I hope this very limited study will help you in your work. Please contact me if 

I can be of further assistance to you or your associates. 

28 

Sincerely, 

Thomas A. Sladek, PhD 

Mr. LAMBORN. All right. I am sure we will have some questions 

shortly. 

Thank you. 

Ms. Spinti? Professor Spinti? 

STATEMENT OF JENNIFER SPINTI, RESEARCH ASSOCIATE 

PROFESSOR, DEPARTMENT OF CHEMICAL ENGINEERING 

AND INSTITUTE FOR CLEAN AND SECURE ENERGY, 

UNIVERSITY OF UTAH 

Ms. SPINTI. Yes, Chairman Lamborn, Congressman Tipton, 

thank you for this opportunity. 

I am here representing the Institute for Clean and Secure 

Energy at the University of Utah. We have had a program in oil 

shale and sands research for approximately the last 5 years. 

I would like to talk about chemical engineering since that is 

what I am, and in chemical engineering, you first draw a control 

volume around the problem you want to solve. And that means you 

are just putting boundaries on the problem. 

So, I want to consider a control volume for a wind turbine that 

sits on a windy ridge. But this control volume doesn’t just include 

the windy ridge, but it includes the mine where the ores are processed that are needed for the wind turbine manufacture. And one 

of those ores that is needed is neodymium ore. Approximately 1 ton 

of metal is needed for the manufacture of a 1 megawatt turbine. 

Most of that manufacturing, as you indicated, I believe, Congressman Tipton, is occurring in China, where they have very lax 


68237.009.eps
29 

environmental laws. And there are toxic lakes of acidic processing 

waste right now because of the ore processing that is going on. 

We can also consider a control volume around a solar power installation in California. Most of the proposed facilities have involved water cooling, which is a very water-intensive process. You 

have higher plant efficiency than air cooling, but it requires lots of 

water. 

If you go look at the California Web site where they apply for 

these or they have applications for these types of facilities, a recently proposed 250 megawatt facility would require 536 million 

gallons of water per year. 

What about mining and water use impacts from oil shale development? Let’s draw a control volume that includes these issues. In 

Utah, the Division of Oil, Gas, and Mining issues permits for oil 

and gas drilling, coal mining, and minerals. 

Oil shale is regulated as a mineral and is subject to minerals regulatory permits. Annual permit fees are required. Operation and 

reclamation plans must be maintained, and approval must be 

sought for modification. 

As for water, a recent analysis by our institute, a previously published estimate shows an average water consumption rate for oil 

shale applications that have—where we have public information is 

2.5 barrels of water per barrel of shale produced. In order to compare that to the water usage of the solar power plant, we have to 

convert from energy content to unit of power. 

So, I made some assumptions about oil shale’s energy content 

and that you would be burning it in a 30 percent efficiency engine. 

And that comes out to a 50,000-barrel-a-day oil shale facility, 1.8 

million gallons of water per megawatt. That is compared to 2.1 million gallons per megawatt for the solar power plant. 

So my question is, is oil shale development orders of magnitude 

worse than any other kind of development that involves extraction 

or use of resources on a large scale? There are certainly other 

issues associated with oil shale development that we can’t ignore 

in our control volume, including the power plant that provides electricity to the oil shale processing plant, the air shed around the facility, the nearby town that will be impacted by development, the 

endangered species and habitat that will be affected, et cetera. 

Do we currently have the information we need to predict with 

some degree of certainty what will happen in our control volume? 

I argue yes and no. So we do have quite a bit of information available in the public arena from previous decades of oil shale research, from oil shale booms and busts, and from current international production. 

The University of Utah, as I mentioned, has had an oil shale and 

sands research center that built on several decades of research at 

the university. We have a report that I brought a copy of for each 

of you that we published in 2007, assessing some of the technical, 

economic, and legal issues associated with oil shale and sands production. We have a current research program looking at quite a few 

issues ranging from policy to economic to technical. I would be 

happy to discuss those research initiatives with you. 

30 

Given all this information, what do we need? We need domestic 

energy resources to fulfill our domestic needs, and the development 

of all resources should be held to the same high standards. 

We need to move all forms of energy development forward so 

that we don’t miss a solution to the problem. Poor solutions will be 

eliminated by the market, by the weight of scientific and economic 

data, or by their failure to meet environmental thresholds set by 

regulation. 

We need a regulatory regime in place that will allow oil shale to 

stand or fall on its own merits. We need opportunities for oil shale 

companies to move their technologies up scale from the laboratory 

to the field, to move from research to application. 

We need companies willing to share information with Government, academia, and the general public. Transparency will be the 

key to success in the arena of public opinion. 

We need a multidisciplinary U.S. oil shale research center to address the unforeseen problems—engineering, socioeconomic, environmental, et cetera—that will arise as processes move up scale. 

Lessons learned at the larger scale can then be used to refine research directions and initiatives. 

In conclusion, at the university, we have a couple of models for 

perhaps moving forward in these arenas. We are working with several oil shale companies, with some simulation tools we have developed, and the idea there is that we want to be able to have quantified predictivity about effects of different technologies. 

We also have a lot of public outreach events, conferences that we 

sponsor that we feel are important to address some of these issues. 

And the common theme with all of the things that we are doing 

are collaboration with a wide range of constituencies and data and 

information sharing. The issues are too large to be discussed and 

solved in isolation. 

Thank you. 

[The prepared statement of Ms. Spinti follows:] 

Statement of Jennifer P. Spinti, Research Associate Professor, Department 

of Chemical Engineering, Assistant Director, Clean & Secure Energy from 

Domestic Oil Shale/Sands Program, Institute for Clean and Secure 

Energy, The University of Utah 

According to the U.S. Environmental Protection Agency, renewable energy comes 

from sources that ‘‘restore themselves over short periods of time and do not diminish’’ (1). Wind energy is one of the renewable energy sources that the U.S. government has supported through direct spending and tax credits and that states have 

pushed through renewable energy targets. At the end of 2010, thanks to rapid expansion in capacity, wind power provided 2.3 percent (∼40,000 MW of the energy 

generated in the U.S. (2,3). According to a metals industry analyst, a wind turbine 

with an electric power generating capacity of 1 MW requires one metric ton of the 

rare earth metal neodymium for making a permanent magnet (4). That neodymium 

is most likely mined in Inner Mongolia, a region in China with more than 90 percent of the world’s reserves. One of China’s most polluted cities, Batou, is located 

in this region adjacent to a 5-mile wide lake of toxic waste containing acids, heavy 

metals, and other chemicals left over from the processing of the neodymium ore (5). 

Studies show high rates of cancer, osteoporosis and skin and respiratory diseases 

in villages around the lake (5). Does the legacy of this environmental impact diminish the status of ‘‘renewable’’ for wind power? 

Another renewable energy source, concentrated solar power, can come with a high 

price tag for water. Wet cooling, where water is evaporated to remove excess heat, 

is preferred by developers. Dry cooling, where fans and heat exchangers are used 

for heat removal, consumes about 90 percent less water but reduces plant efficiency, 

thus reducing profitability (6). The California Energy Commission has received nuVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
31 

merous applications for large-scale solar energy projects in California, and many 

have large water requirements due to their use of wet cooling technology (7). For 

example, the Genesis Solar Energy Project would consume an estimated 536 million 

gallons of water a year for power plant cooling, process water makeup, mirror washing, etc. to produce 250 MW of electricity (8), a rate of 2.1 million gallons of water 

per megawatt of power generated by this renewable energy source. Is this a sustainable level of water consumption in the arid southwestern deserts where concentrated solar plants are targeted for development? 

What about mining and water use impacts from oil shale development? In Utah, 

the Division of Oil, Gas, and Mining (DOGM) issues permits for oil and gas drilling, 

coal mining, and minerals mining using guidelines established in the Utah Oil and 

Gas Conservation Act, the Utah Mined Land Reclamation Act, and the Utah Coal 

Mining and Reclamation Act (9). Oil shale is regulated as a mineral and is subject 

to minerals regulatory permits. A large mine, defined as greater than 10 acres, requires a 50+ page application that includes detailed calculations for the bond based 

upon specific operations. In addition, annual permit fees are required, operation and 

reclamation plans must be maintained, and approval must be sought for modification (9). 

DOGM currently oversees 670 permitted mines in the state of Utah (10). Coal, 

oil sands, and oil shale mines are particularly controversial. In 2010, after a lengthy 

appeals process, DOGM issued a permanent program permit to a new surface coal 

mine, the Coal Hollow Mine, which allows 635 acres of surface disturbance. Earth 

Energy Resources has applied for a permit to mine 213 acres of oil sands. That permit is currently in appeal (9). Red Leaf Resources is in the process of applying for 

a large mine permit for development of its oil shale resources. 

It is unclear what water consumption rates for oil shale development will be. A 

recent analysis of previously published estimates shows an average water consumption rate of 2.5 barrels of water per barrel of oil produced (11). An ethanol plant 

requires four barrels of water to produce one barrel of ethanol, and this amount 

does not include the water needed for the cultivation of corn (12). How does water 

usage for oil shale compare to that for the solar energy plant? The energy content 

of a barrel of oil is measured in units of energy while power plant output is reported 

in units of power. To compare the two, one must make several assumptions. If one 

assumes the energy content of a barrel of shale oil to be approximately 1.7 MWh 

(13) and that it is burned in an engine that has an efficiency of 30 percent, then 

a 50,000 barrels per day oil shale operation would produce a power equivalent of 

approximately 1060 MW. At 2.5 barrels of makeup water required per barrel of oil 

produced, yearly water consumption would be in the 1,900 million gallon range, or 

1.8 million gallons of water per megawatt of power produced. 

Is oil shale development orders of magnitude worse than any other kind of development that involves extraction or use of resources on a large scale? The above 

paragraphs address two common critiques used to single out oil shale development, 

e.g. land disturbance and water usage. There are also critiques related to energy 

usage, air quality, carbon footprint, capital cost, socioeconomic impacts, etc. All of 

these concerns are valid given the potential scale of oil shale development in the 

Uinta and Piceance Basins of Utah and Colorado (see Figure 1). However, there is 

currently a dearth of data on which to base projections for large-scale impacts because the last active U.S. oil shale facility, the Union Oil operation located in Parachute, CO, was shut down in 1991 (14), and the current round of Research, Development, and Demonstration (RD&D) leases has yet to provide publicly available information on the economic feasibility of various oil shale extraction technologies. 

What information on oil shale development and its impacts do we have in the 

public arena? We have reports and papers from decades of research by academia, 

national laboratories, companies, and other entities, the experience of oil shale companies currently producing in other countries, and the lessons learned from previous 

oil shale booms. 

The University of Utah has been a contributor to this body of knowledge for many 

years, beginning with the work of Professor H. Y. Sohn during the oil shale boom 

of the 1970s and early 1980s and continuing with contributions from Professor J. 

D. Miller, Dr. James Bunger, and Professor M. D. Deo. In late 2005, the Institute 

for Clean and Secure Energy (ICSE) at the University of Utah announced the creation of the Utah Heavy Oil Program (UHOP). UHOP’s original mission was to provide research support to federal and state constituents for addressing the wide-ranging issues surrounding the creation of an industry for oil shale, oil sands and heavy 

oil production in the U.S. The scope of the mission was later reduced to focus exclusively on oil shale and oil sands production. The research sponsored by UHOP was 

broad and interdisciplinary in nature, involving researchers from the Colleges of Engineering, Science, Law, and Business. Funding for UHOP came as the result of a 

32 

Congressionally Directed Program; the FY2006 budget was $1.8 million. At the time 

it was funded, there had been no federal support for oil shale/sands research for 

well over a decade. Part of the renewed interest in oil shale and oil sands was the 

passage of the Energy Policy Act of 2005 (EPAct 2005). 

UHOP was given two directives in EPAct 2005. The first was to prepare an update to the 1988 technical and economic assessment of domestic heavy oil resources 

(15) and to the 1996 Department of Energy feasibility study of heavy oil recovery 

(16). UHOP published ‘‘A Technical, Economic, and Legal Assessment of North 

American Heavy Oil, Oil Sands, and Oil Shale Resources’’ in 2007. This report evaluated the size of the North American unconventional fuel resource, the production 

technologies available, the upgrading and refining steps needed, and the economic, 

social, legal, and environmental issues related to unconventional fuels production 

(17). The second directive was to sponsor research that related to the objective of 

Section 369 of EPAct 2005. Four of the sponsored projects were directly related to 

oil shale and included reservoir modeling for in situ production of oil shale, oil shale 

pyrolysis kinetics, a analysis of how a federal oil shale program might be implemented, water usage estimates for oil shale development in Utah’s Uinta Basin, and 

produced water treatment options. A final report was submitted to the Department 

of Energy (DOE) in early 2010 (18). 

ICSE received additional funding in FY2008, FY2009, and FY2010 for the Clean 

and Secure Energy from Domestic Oil Shale and Oil Sands Resources Program. Current research initiatives include the simulation of a modified in situ production process, the development of improved models for kerogen pyrolysis, the development of 

a predictive geologic model for the Uinta Basin, an analysis of the geomechanical 

reservoir state (including subsidence issues associated with in situ production), 

basin scale simulation of the economic and environmental impacts of oil shale development, and conjunctive management of surface water and groundwater resources 

in Utah. An economic assessment of various oil shale and oil sands development scenarios in Utah’s Uinta Basin is also being prepared for publication this fall. 

Given that we have all this information, what do we need? We need domestic energy resources to fulfill our domestic needs, and the development of all resources 

should be held to the same high standards. If we don’t like the tailings ponds and 

open pit oil sands mines in Alberta or the toxic wastes generated by rare earth 

mines in China for wind turbine components, we need domestic development adherent to more stringent U.S. environmental laws. We need to move all forms of energy 

development forward so that we don’t miss a solution to the problem. Poor solutions 

will be eliminated by the market, by the weight of scientific and economic data, or 

by their failure to meet environmental thresholds set by regulation. We need a regulatory regime in place that will allow oil shale to stand or fall on its own merits. 

For example, oil shale development is and should be held to the same standard as 

all other types of mining operations in the state of Utah. It should not be singled 

out for approval or disapproval just because of the resource type that is being 

mined. We need opportunities for companies to move their technologies upscale. As 

a 2005 Rand report on oil shale development notes, ‘‘Reliable estimates of water requirements will not be available until the technology reaches the scale-up and confirmation stage’’ (19). We need companies willing to share information with government and academia. It is difficult to employ tools such as high performance computing that could lead to more rapid deployment of technologies without data for 

validation and uncertainty quantification. We need a multidisciplinary U.S. oil shale 

research center. Unforeseen problems will arise, and additional research will be required to address those problems. All of those problems will not have an engineering 

solution, so such a research center will require experts in the fields of policy, environmental science, law, and economics in addition to engineering and science. Finally, we need research to be moved out of the laboratory and/or the policy think 

tank and into application. Lessons learned at the larger scale can then be used to 

refine research directions and initiatives. 

ICSE has several models for moving forward with respect to the engineering, policy/legal, and economic sides of oil shale development. On the engineering side, 

ICSE has partnered with several oil shale technology companies to produce simulation tools with quantified predictivity that can be used by industry to assist in the 

assessment of the technological, economic and environmental consequences of the 

production of new gas and liquid fuels from U.S. oil shale/sands deposits. The first 

model is the application of the simulation tools to Red Leaf Resources’ patented 

EcoShale process. In this model, Red Leaf is providing temperature data so that the 

thermal heating of oil shale can be evaluated. The simulation tools will also be used 

to study product yield as a function of operating conditions for indirectly heated, 

rubblized oil shale beds. 

33 

The second model is a capstone project that is intended to draw together the results of many years of ICSE research to demonstrate computational simulation capability for the assessment and deployment of the shale oil production process commercialized by American Shale Oil, LLC (AMSO). In this integrated project, we are 

coupling simulation capabilities with experimental data from key small-scale experiments in a formal validation process where the controlling uncertainties are accounted for and quantified. Our goal is to demonstrate that optimal risk assessment 

and decision-making regarding deployment of this new technology is most efficiently 

accomplished by this formal validation and uncertainty quantification process. In 

this model, AMSO is providing funding for the small-scale experiments. 

The third model is a joint research project with Los Alamos National Laboratory 

(LANL) to develop a predictive tool for assessing the basin- or regional-scale environmental and economic impacts of unconventional fuel development. LANL developed a dynamic, integrated assessment tool several years ago that is being updated, 

improved, and subjected to a rigorous validation and uncertainty quantification 

process through the cooperative efforts of ICSE and LANL researchers. 

On the policy/legal side, ICSE is collaborating with the Wallace Stegner Center 

for Land, Resources, and the Environment at the University of Utah. Professor Robert Keiter, the director of the Stegner Center, is also the Associate Director of ICSE 

for Legal and Policy. Together, ICSE and the Stener Center have hosted the Energy 

Forum the past two years. The Energy Forum 2011 will feature former U.S. Senator 

Bob Bennett and former Wyoming Governor Dave Freudenthal in a panel discussion 

of energy policy challenges including climate change, regional energy demand, natural resources, and national energy security. 

Outreach efforts by ICSE also include hosting the annual University of Utah Unconventional Fuels Conference. This year’s conference featured speakers from the 

Bureau of Land Management Office in Washington, D.C., a member of the Ute Tribe 

whose lands encompass significant conventional and unconventional fuel resources, 

representatives from AMSO, Red Leaf, and Enefit, and the director of the Division 

of Oil, Gas, and Mining for the state of Utah. ICSE has also teamed with the Utah 

Geological Survey and the Bingham Entreprenseurship and Energy Research Center 

in Vernal, UT, to lead field trips to oil shale and sands sites in the Uinta Basin. 

I will be happy to answer any questions you might have about specific research 

results, overall program directions, or information contained in our reports at the 

hearing. 

References 

1. U.S. Environmental Protection Agenday. (n.d.). Green power market. Retrieved Augsut 19. 2011, from http://www.epa.gov/greenpower/gpmarket/. 

2. American Wind Energy Association. (n.d.) Industry statistics. Retrieved August 19, 2011, from http://www.awea.org/learnabout/industry_stats/index.cfm. 

3. Science Daily (2011, April 27). Wind turbines: In the wake of the wind. Retrieved August 21, 2011, from http://www.sciencedaily.com/releases/2011/04/ 

110426151040.htm). 

4. Lifton, J. (2009, March 4). Braking wind: Where’s the neodymium going to 

come from? Technology Metals Research. Retrieved August 21, 2011, from 

http://www.techmetalsresearch.com/2009/03/braking-wind-wheres-the-neodymium-going-to-come-from/. 

5. Parry, S. & Douglas, E. (2011, January 29). In China, the true cost of Britain’s clean, green wind power experiment: Pollution on a disastrous scale. 

Mail Online. Retrieved August 20, 2011, from http://www.dailymail.co.uk/ 

home/moslive/article-1350811/In-China-true-cost-Britains-clean-green-windpower-experiment-Pollution-disastrous-scale.html. 

6. Woody, T. (2009, September 29). Alternative energy projects stumble on a 

need for water. The New York Times. Retrieved August 22, 2011, from http:// 

www.nytimes.com/2009/09/30/business/energy-environment/30water.htm. 

7. Woody, T. (2009, October 27). Water use by solar projects intensifies. The 

New York Times. Retrieved August 21, 2011, from http:// 

green.blogs.nytimes.com/2009/10/27/water-use-by-solar-projects-intensifies/. 

8. California Energy Commission (n.d.). Genesis solar energy project. Retrieved 

August 21, 2011, from http://www.energy.ca.gov/sitingcases/genesis_solar/ 

index.html. 

9. Baza, J. (2011, May). Division of Oil, Gas, and Mining permitting processes. 

Paper presented at the 2011 University of Utah Unconventional Fuels Conference, Salt Lake City, UT. Retrieved August 19, 2011, from http:// 

www.icse.utah.edu/assets/archive/2011/ucf_agenda.htm. 

10. Division of Oil, Gas, and Mining. (n.d.). Associate directors. Retrieved August 

22, 2011, from http://linux1.ogm.utah.gov/WebStuff/wwwroot/tabs.html. 

34 

11. Ruple, J. & Keiter, R. (2010). Policy Analysis of Water Availability and Use 

Issues For Domestic Oil Shale and Oil Sands Development. Salt Lake City, 

UT: Institute for Clean & Secure Energy, University of Utah. Retrieved from 

http://repository.icse.utah.edu/dspace/handle/123456789/11017. 

12. Rapier, R. (2007, March 20). Water usage in an oil refinery. Consumer Energy 

Report. Retrieved August 22, 2011, from http:// 

www.consumerenergyreport.com/2007/03/20/water-usage-in-an-oil-refinery/. 

13. Wikipedia (n.d.). Barrel of oil equivalent. Retrieved August 22, 2011, from 

http://en.wikipedia.org/wiki/Barrel_of_oil_equivalent 

14. Russell, P. L. (1990). Oil shales of the world, their origin, occurrence, and exploitation. Pergamon Press: New York. 

15. Dowd, W. T., Kuuskraa, V. A., & Godec, M. L. (1988). A technical and economic assessment of domestic heavy oil: Final report (DOE/BC/10840–1). 

Interstate Oil Compact Commission: Oklahoma City, OK. 

16. Strycker, A. R., Wadkins, R., Olsen, D. K., Sarkar, A. K. Ramzel, E. B., Johnson, W. I., & Pautz, J. (1996). Feasibility study of heavy oil recovery in the 

United States (NIPER.BDM–0225). BDM–Oklahoma, Inc.: Bartlesville, OK. 

17. Institute for Clean and Secure Energy. (2007). A technical, economic, and 

legal assessment of North American heavy oil, oil sands, and oil shale resources. Salt Lake City, UT: Author. Retrieved from http://repository.icse.utah.edu/dspace/handle/123456789/10823. 

18. Institute for Clean and Secure Energy. (2010). Utah Heavy Oil Program: 

Final scientific/technical report, project period June 21, 2006 to October 20, 

2009. Salt Lake City, UT: Author. Retrieved from http://repository.icse.utah.edu/dspace/handle/123456789/11086. 

19. Bartis, J. T., LaTourrette, T., Dixon, L. Peterson, D. J., & Cecchine, G. (2005). 

Oil shale development in the United States (MG–414–NETL). RAND Corporation: Santa Monica, CA. 

Mr. LAMBORN. All right, thank you. 

Ms. Mittal? 


68237.001.eps
35 

STATEMENT OF ANU MITTAL, DIRECTOR, NATURAL 

RESOURCES AND ENVIRONMENT DIVISION, GOVERNMENT 

ACCOUNTABILITY OFFICE 

Ms. MITTAL. Chairman Lamborn and Congressman Tipton, I am 

pleased to be here today to participate in your field hearing on oil 

shale development. 

As you know, interest in developing a domestic oil shale industry 

can be traced back to the early 1900s. However, the industry has 

been hampered by technological challenges, average oil prices that 

have been too low to consistently justify investment in this resource, and concerns about the potential impacts on the environment. 

In October 2010, GAO issued a report that focused on one area 

of particular concern—the amount of water that could be needed to 

develop an oil shale industry. My testimony today will summarize 

the findings of that report and focus on what is known about the 

potential impacts of oil shale development on water resources, what 

is known about the amount of water that may be needed for the 

commercial development of oil shale, the extent to which water 

could be a potential limiting factor in the industry’s development, 

and the need for Federal research efforts to help mitigate these potential impacts. 

First, we found that oil shale development could have significant 

impacts on the quantity and quality of water resources in Colorado 

and Utah, but the magnitude of these impacts is largely unknown. 

This is because the technologies that would be used have not yet 

been commercially proven, the size of the future oil shale industry 

is currently uncertain, and there is limited knowledge of current 

water conditions and groundwater flows in the area. 

While it is difficult to definitively determine the quantitative impacts of oil shale development on water resources, it is possible to 

identify the potential qualitative impacts of this development. For 

example, oil shale development could impact water quality through 

surface disturbances from the construction of roads and production 

facilities. 

Water quality could also be impacted by large water withdrawals 

from streams and aquifers and from discharges of contaminants 

through operations. It will, therefore, be critical for the industry to 

implement effective measures to mitigate these potential impacts. 

With regard to the amount of water that could be needed to develop a commercial oil shale industry, we found that the estimates 

varied widely, depending on the characteristics of the processes 

used. We also found that there is greater uncertainty in how much 

water could be needed by an in-situ operation versus a surface retorting operation. 

Nonetheless, it is expected that the average total water needs for 

the entire oil shale production life cycle could be about three barrels of water for each barrel of oil produced for surface retorting operations and five barrels for in-situ operations. Most of the companies that we contacted said that they are looking for ways to reduce their water use, for example, by reusing or recycling water at 

their operations. 

We also found that while the amount of water needed for the initial development of an oil shale industry is most likely available, 

36 

the growth of the industry may be limited by a number of factors 

that could impact future water availability. Most of the companies 

we contacted were confident that they held enough water rights for 

their initial shale development projects, and they would most likely 

be able to purchase more rights in the future as needed. 

However, these companies could face challenges in acquiring additional water rights in the future because of expected increases in 

water demands from municipal and industrial users in these areas, 

because of potential reductions in water supplies from a warming 

climate, and because of greater need for water to fulfill interstate 

compact obligations and protect endangered species. 

Finally, since 2006, the Federal Government had spent over $22 

million on oil shale development research, and only about $5 million of this amount was spent to study water-related issues. However, most Government officials and water experts that we spoke 

to agree that there are insufficient data on the baseline conditions 

of water resources in the oil shale regions of Colorado and Utah 

and that additional research is needed to understand the movement of groundwater and its interaction with surface water. 

We also found that Federal officials at DOE and Interior seldom 

coordinate their water-related oil shale research with each other or 

with State water officials. As a result of these findings, we made 

three recommendations to Interior to proactively begin preparing 

for the potential impacts of a future oil shale industry. Interior 

generally concurred with our recommendations and noted that it 

has and will continue to take actions to implement them. 

In conclusion, Mr. Chairman, for nearly a century, industry, with 

some Government support, has focused on overcoming the technological challenges of developing a commercially viable oil shale industry. However, there are a number of other associated impacts 

that should not be overlooked, and now is the time for Federal 

agencies to proactively begin focusing on these issues. 

This concludes my prepared statement. I would be happy to answer any questions. 

[The prepared statement of Ms. Mittal follows:] 

Statement of Anu K. Mittal, Director, Natural Resources and Environment 

Team, United States Government Accountability Office 

Chairman Lamborn, Ranking Member Holt, and Members of the Subcommittee: 

I am pleased to be here today to participate in your field hearing on oil shale development. As you know, being able to tap the vast amounts of oil locked within 

U.S. oil shale could go a long way toward satisfying our nation’s future oil demands. 

The Green River Formation—an assemblage of over 1,000 feet of sedimentary rocks 

that lie beneath parts of Colorado, Utah, and Wyoming—contains the world’s largest 

deposits of oil shale. The U.S. Geological Survey (USGS) estimates that the Green 

River Formation contains about 3 trillion barrels of oil and that about half of this 

may be recoverable, depending on available technology and economic conditions. 

This is an amount about equal to the entire world’s proven oil reserves. The thickest 

and richest oil shale within the Green River Formation exists in the Piceance Basin 

of northwest Colorado and the Uintah Basin of northeast Utah (see app. I). The federal government is in a unique position to influence the development of oil shale 

because 72 percent of the oil shale within the Green River Formation is beneath 

federal lands managed by the Department of the Interior’s (Interior) Bureau of Land 

Management (BLM). The Department of Energy (DOE) has provided technological 

and financial support for oil shale development through its research and development efforts, but oil shale development has been hampered by technological challenges, average oil prices that have been too low to consistently justify investment, 

and concerns over potential impacts on the environment. 

37 

1GAO, Energy-Water Nexus: A Better and Coordinated Understanding of Water Resources 

Could Help Mitigate the Impacts of Potential Oil Shale Development, GAO-11-35 (Washington, 

D.C.; Oct. 29, 2010). 

One area of particular concern is that developing oil shale will require large 

amounts of water—a resource that is already in scarce supply in the arid West 

where an expanding population is placing additional demands on water. Some analysts project that large scale oil shale development within Colorado could require 

more water than is currently supplied to over 1 million residents of the Denver 

metro area and that water diverted for oil shale operations would restrict agricultural and urban development. The potential demand for water is further complicated by the past decade of drought in the West and projections of a warming 

climate in the future. In October 2010, we issued a report that examined the nexus 

between oil shale development and water impacts. 1

My testimony today will summarize the findings of that report. Specifically, I will 

discuss (1) what is known about the potential impacts of oil shale development on 

surface water and groundwater, (2) what is known about the amount of water that 

may be needed for the commercial development of oil shale, (3) the extent to which 

water will likely be available for commercial oil shale development and its source, 

and (4) federal research efforts to address impacts on water resources from commercial oil shale development. To perform this work we, among other things, reviewed 

an environmental impact statement on oil shale development prepared by BLM and 

various studies from private and public groups; we also interviewed officials at 

DOE, USGS, BLM; state regulatory agencies in Colorado and Utah; oil shale industry representatives; water experts; and organizations performing research, including 

universities and national laboratories, and reviewed relevant documents describing 

their research. We conducted this work in accordance with generally accepted government auditing standards. 

Background 

Interest in oil shale as a domestic energy source has waxed and waned since the 

early 1900s. More recently, the Energy Policy Act of 2005 directed BLM to lease its 

lands for oil shale research and development. In June 2005, BLM initiated a leasing 

program for research, development, and demonstration (RD&D) of oil shale recovery 

technologies. By early 2007, it granted six small RD&D leases: five in the Piceance 

Basin of northwest Colorado and one in Uintah Basin of northeast Utah. The leases 

are for a 10-year period, and if the technologies are proven commercially viable, the 

lessees can significantly expand the size of the leases for commercial production into 

adjacent areas known as preference right lease areas. The Energy Policy Act of 2005 

also directed BLM to develop a programmatic environmental impact statement 

(PEIS) for a commercial oil shale leasing program. During the drafting of the PEIS, 

however, BLM realized that, without proven commercial technologies, it could not 

adequately assess the environmental impacts of oil shale development and dropped 

from consideration the decision to offer additional specific parcels for lease. Instead, 

the PEIS analyzed making lands available for potential leasing and allowing industry to express interest in lands to be leased. Environmental groups then filed lawsuits, challenging various aspects of the PEIS and the RD&D program. Since then, 

BLM has initiated another round of oil shale RD&D leasing. 

Stakeholders in the future development of oil shale are numerous and include the 

federal government, state government agencies, the oil shale industry, academic institutions, environmental groups, and private citizens. Among federal agencies, BLM 

manages the land and the oil shale beneath it and develops regulations for its development. USGS describes the nature and extent of oil shale deposits and collects and 

disseminates information on the nation’s water resources. DOE, through its various 

offices, national laboratories, and arrangements with universities, advances energy 

technologies, including oil shale technology. The Environmental Protection Agency 

(EPA) sets standards for pollutants that could be released by oil shale development 

and reviews environmental impact statements, such as the PEIS. Interior’s Bureau 

of Reclamation (BOR) manages federally built water projects that store and distribute water in 17 western states and provides this water to users. BOR monitors 

the amount of water in storage and the amount of water flowing in the major 

streams and rivers, including the Colorado River, which flows through oil shale 

country and feeds these projects. BOR provides its monitoring data to federal and 

state agencies that are parties to three major federal, state, and international agreements that together with other federal laws, court decisions, and agreements, govVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
38 

2These three major agreements are the Colorado River Compact of 1922, the Upper Colorado 

River Basin Compact of 1948, and the Mexican Water Treaty of 1944. 

ern how water within the Colorado River and its tributaries is to be shared with 

Mexico and among the states in which the river or its tributaries are located. 2

The states of Colorado and Utah have regulatory responsibilities over various activities that occur during oil shale development, including activities that impact 

water. Through authority delegated by EPA under the Clean Water Act, Colorado 

and Utah regulate discharges into surface waters. Colorado and Utah also have authority over the use of most water resources within their respective state boundaries. They have established extensive legal and administrative systems for the orderly use of water resources, granting water rights to individuals and groups. Water 

rights in these states are not automatically attached to the land upon which the 

water is located. Instead, companies or individuals must apply to the state for a 

water right and specify the amount of water to be used, its intended use, and the 

specific point from where the water will be diverted for use, such as a specific point 

on a river or stream. Utah approves the application for a water right through an 

administrative process, and Colorado approves the application for a water right 

through a court proceeding. The date of the application establishes its priority—earlier applicants have preferential entitlement to water over later applicants if water 

availability decreases during a drought. These earlier applicants are said to have 

senior water rights. When an applicant puts a water right to beneficial use, it is 

referred to as an absolute water right. Until the water is used, however, the applicant is said to have a conditional water right. Even if the applicant has not yet put 

the water to use, such as when the applicant is waiting on the construction of a 

reservoir, the date of the application still establishes priority. Water rights in both 

Colorado and Utah can be bought and sold, and strong demand for water in these 

western states facilitates their sale. 

A significant challenge to the development of oil shale lies in the current technology to economically extract oil from oil shale. To extract the oil, the rock needs 

to be heated to very high temperatures—ranging from about 650 to 1,000 degrees 

Fahrenheit—in a process known as retorting. Retorting can be accomplished primarily by two methods. One method involves mining the oil shale, bringing it to the 

surface, and heating it in a vessel known as a retort. Mining oil shale and retorting 

it has been demonstrated in the United States and is currently done to a limited 

extent in Estonia, China, and Brazil. However, a commercial mining operation with 

surface retorts has never been developed in the United States because the oil it produces competes directly with conventional crude oil, which historically has been less 

expensive to produce. The other method, known as an in-situ process, involves drilling holes into the oil shale, inserting heaters to heat the rock, and then collecting 

the oil as it is freed from the rock. Some in-situ technologies have been demonstrated on very small scales, but other technologies have yet to be proven, and 

none has been shown to be economically or environmentally viable. 

Nevertheless, according to some energy experts, the key to developing our country’s oil shale is the development of an in-situ process because most of the richest 

oil shale is buried beneath hundreds to thousands of feet of rock, making mining 

difficult or impossible. Additional economic challenges include transporting the oil 

produced from oil shale to refineries because pipelines and major highways are not 

prolific in the remote areas where the oil shale is located, and the large-scale infrastructure that would be needed to supply power to heat oil shale is lacking. In addition, average crude oil prices have been lower than the threshold necessary to make 

oil shale development profitable over time. 

Large-scale oil shale development also brings socioeconomic impacts. There are 

obvious positive impacts such as the creation of jobs, increase in wealth, and tax 

and royalty payments to governments, but there are also negative impacts to local 

communities. Oil shale development can bring a sizeable influx of workers, who 

along with their families, put additional stress on local infrastructure such as roads, 

housing, municipal water systems, and schools. Development from expansion of extractive industries, such as oil shale or oil and gas, has typically followed a ‘‘boom 

and bust’’ cycle in the West, making planning for growth difficult. Furthermore, traditional rural uses could be replaced by the industrial development of the landscape, 

and tourism that relies on natural resources, such as hunting, fishing, and wildlife 

viewing, could be negatively impacted. 

Developing oil shale resources also faces significant environmental challenges. For 

example, construction and mining activities can temporarily degrade air quality in 

local areas. There can also be long-term regional increases in air pollutants from 

oil shale processing, upgrading, pipelines, and the generation of additional electricity. Pollutants, such as dust, nitrogen oxides, and sulfur dioxide, can contribute 

39 

to the formation of regional haze that can affect adjacent wilderness areas, national 

parks, and national monuments, which can have very strict air quality standards. 

Because oil shale operations clear large surface areas of topsoil and vegetation, some 

wildlife habitat will be lost. Important species likely to be negatively impacted from 

loss of wildlife habitat include mule deer, elk, sage grouse, and raptors. Noise from 

oil shale operations, access roads, transmission lines, and pipelines can further disturb wildlife and fragment their habitat. Environmental impacts could be compounded by the impacts of coal mining, construction, and extensive oil and gas development in the area. Air quality and wildlife habitat appear to be particularly susceptible to the cumulative effect of these impacts, and according to some environmental experts, air quality impacts may be the limiting factor for the development 

of a large oil shale industry in the future. Lastly, the withdrawal of large quantities 

of surface water for oil shale operations could negatively impact aquatic life downstream of the oil shale development. My testimony today will discuss impacts to 

water resources in more detail. 

Oil Shale Development Could Adversely Impact Water Resources, but the 

Magnitude of These Impacts Is Unknown 

In our October report, we found that oil shale development could have significant 

impacts on the quantity and quality of surface and groundwater resources, but the 

magnitude of these impacts is unknown. For example, we found that it is not possible to quantify impacts on water resources with reasonable certainty because it 

is not yet possible to predict how large an oil shale industry may develop. The size 

of the industry would have a direct relationship to water impacts. We noted that, 

according to BLM, the level and degree of the potential impacts of oil shale development cannot be quantified because this would require making many speculative assumptions regarding the potential of the oil shale, unproven technologies, project 

size, and production levels. 

Hydrologists and engineers, while not able to quantify the impacts from oil shale 

development, have been able to determine the qualitative nature of its impacts because other types of mining, construction, and oil and gas development cause disturbances similar to impacts that would be expected from oil shale development. According to these experts, in the absence of effective mitigation measures, impacts 

from oil shale development to water resources could result from disturbing the 

ground surface during the construction of roads and production facilities, withdrawing water from streams and aquifers for oil shale operations, underground mining and extraction, and discharging waste waters from oil shale operations. For example, we reported that oil shale operations need water for a number of activities, 

including mining, constructing facilities, drilling wells, generating electricity for operations, and reclamation of disturbed sites. Water for most of these activities is 

likely to come from nearby streams and rivers because it is more easily accessible 

and less costly to obtain than groundwater. Withdrawing water from streams and 

rivers would decrease flows downstream and could temporarily degrade downstream 

water quality by depositing sediment within the stream channels as flows decrease. 

The resulting decrease in water would also make the stream or river more susceptible to temperature changes—increases in the summer and decreases in the winter. 

These elevated temperatures could have adverse impacts on aquatic life, which need 

specific temperatures for proper reproduction and development and could also decrease dissolved oxygen, which is needed by aquatic animals. 

We also reported that both underground mining and in-situ operations would permanently impact aquifers. For example, underground mining would permanently 

alter the properties of the zones that are mined, thereby affecting groundwater flow 

through these zones. The process of removing oil shale from underground mines 

would create large tunnels from which water would need to be removed during mining operations. The removal of this water through pumping would decrease water 

levels in shallow aquifers and decrease flows to streams and springs that are connected. When mining operations cease, the tunnels would most likely be filled with 

waste rock, which would have a higher degree of porosity and permeability than the 

original oil shale that was removed. Groundwater flow through this material would 

increase permanently, and the direction and pattern of flows could change permanently. Similarly, in-situ extraction would also permanently alter aquifers because 

it would heat the rock to temperatures that transform the solid organic compounds 

within the rock into liquid hydrocarbons and gas that would fracture the rock upon 

escape. The long-term effects of groundwater flows through these retorted zones are 

unknown. Some in-situ operations envision using a barrier to isolate thick zones of 

oil shale with intervening aquifers from any adjacent aquifers and pumping out all 

the groundwater from this isolated area before retorting. 

40 

The discharge of waste waters from operations would also temporarily increase 

water flows in receiving streams. These discharges could also decrease the quality 

of downstream water if the discharged water is of lower quality, has a higher temperature, or contains less oxygen. Lower-quality water containing toxic substances 

could increase fish and invertebrate mortality. Also, increased flow into receiving 

streams could cause downstream erosion. However, if companies recycle waste water 

and water produced during operations, these discharges and their impacts could be 

substantially reduced. 

Estimates of Water Needs for Commercial Oil Shale Development Vary 

Widely 

Commercial oil shale development requires water for numerous activities throughout its life cycle; however, we found that estimates vary widely for the amount of 

water needed to produce oil shale. These variations stem primarily from the uncertainty associated with reclamation technologies for in-situ oil shale development and 

because of the various ways to generate power for oil shale operations, which use 

different amounts of water. 

In our October report, we stated that water is needed for five distinct groups of 

activities that occur during the life cycle of oil shale development: (1) extraction and 

retorting, (2) upgrading of shale oil, (3) reclamation, (4) power generation, and (5) 

population growth associated with oil shale development. However, we found that 

few studies that we examined included estimates for the amount of water used by 

each of these activities. Consequently, we calculated estimates of the minimum, 

maximum, and average amounts of water that could be needed for each of the five 

groups of activities that comprise the life cycle of oil shale development. Based on 

our calculations, we estimated that about 1 to 12 barrels of water could be needed 

for each barrel of oil produced from in-situ operations, with an average of about 5 

barrels (see table 1); and about 2 to 4 barrels of water could be needed for each barrel of oil produced from mining operations with a surface retort operation, with an 

average of about 3 barrels (see table 2). 


68237.010.eps 68237.011.eps
41 

Water Is Likely to Be Available Initially from Local Sources, but the Size 

of an Oil Shale Industry May Eventually Be Limited by Water Availability 

In October 2010, we reported that water is likely to be available for the initial 

development of an oil shale industry, but the eventual size of the industry may be 

limited by the availability of water and demands for water to meet other needs. Oil 

shale companies operating in Colorado and Utah will need to have water rights to 

develop oil shale, and representatives from all of the companies with whom we 

spoke were confident that they held at least enough water rights for their initial 

projects and will likely be able to purchase more rights in the future. According to 

a study by the Western Resource Advocates, a nonprofit environmental law and policy organization, of water rights ownership in the Colorado and White River Basins 

of Colorado companies have significant water rights in the area. For example, the 

study found that Shell owns three conditional water rights for a combined diversion 

of about 600 cubic feet per second from the White River and one of its tributaries 

and has conditional rights for the combined storage of about 145,000 acre-feet in two 

proposed nearby reservoirs. 

In addition to exercising existing water rights and agreements, there are other options for companies to obtain more water rights in the future, according to state officials in Colorado and Utah. In Colorado, companies can apply for additional water 

rights in the Piceance Basin on the Yampa and White Rivers. For example, Shell 

recently applied—but subsequently withdrew the application—for conditional rights 

to divert up to 375 cubic feet per second from the Yampa River for storage in a proposed reservoir that would hold up to 45,000 acre-feet for future oil shale development. In Utah, however, officials with the State Engineer’s office said that additional water rights are not available, but that if companies want additional rights, 

they could purchase them from other owners. 

Most of the water needed for oil shale development is likely to come first from 

surface flows, as groundwater is more costly to extract and generally of poorer quality in the Piceance and Uintah Basins. However, companies may use groundwater 

in the future should they experience difficulties in obtaining rights to surface water. 

Furthermore, water is likely to come initially from surface sources immediately adjacent to development, such as the White River and its tributaries that flow through 

the heart of oil shale country in Colorado and Utah, because the cost of pumping 

water over long distances and rugged terrain would be high, according to water experts. 

Developing a sizable oil shale industry may take many years—perhaps 15 or 20 

years by some industry and government estimates—and such an industry may have 

to contend with increased demands for water to meet other needs. For example, substantial population growth and its correlative demand for water are expected in the 

oil shale regions of Colorado and Utah. State officials expect that the population 

within the region surrounding the Yampa, White, and Green Rivers in Colorado will 

triple between 2005 and 2050. These officials expect that this added population and 

corresponding economic growth by 2030 will increase municipal and industrial demands for water, exclusive of oil shale development, by about 22,000 acre-feet per 

year, or a 76 percent increase from 2000. Similarly in Utah, state officials expect 

the population of the Uintah Basin to more than double its 1998 size by 2050 and 

that correlative municipal and industrial water demands will increase by 7,000 acrefeet per year, or an increase of about 30 percent since the mid-1990s. Municipal officials in two communities adjacent to proposed oil shale development in Colorado 

said that they were confident of meeting their future municipal and industrial demands from their existing senior water rights and as such will probably not be affected by the water needs of a future oil shale industry. However, large withdrawals 

could impact agricultural interests and other downstream water users in both 

states, as oil shale companies may purchase existing irrigation and agricultural 

rights for their oil shale operations. State water officials in Colorado told us that 

some holders of senior agricultural rights have already sold their rights to oil shale 

companies. A future oil shale industry may also need to contend with a general decreased physical supply of water regionwide due to climate change; Colorado’s and 

Utah’s obligations under interstate compacts that could further reduce the amount 

of water available for development; and limitations on withdrawals from the Colorado River system to meet the requirements to protect certain fish species under 

the Endangered Species Act. 

Oil shale companies own rights to a large amount of water in the oil shale regions 

of Colorado and Utah, but we concluded that there are physical and legal limits on 

how much water they can ultimately withdraw from the region’s waterways, which 

will limit the eventual size of the overall industry. Physical limits are set by the 

amount of water that is present in the river, and the legal limit is the sum of the 

42 

water that can be legally withdrawn from the river as specified in the water rights 

held by downstream users. Our analysis of the development of an oil shale industry 

at Meeker, Colorado, based on the water available in the White River, suggests that 

there is much more water than is needed to support the water needs for all the sizes 

of an industry that would rely on mining and surface retorting that we considered. 

However, if an industry that uses in-situ extraction develops, water could be a limiting factor just by the amount of water physically available in the White River. 

Federal Research Efforts on the Impacts of Oil Shale Development on 

Water Resources Do Not Provide Sufficient Data for Future Monitoring 

Since 2006, the federal government has sponsored over $22 million of research on oil shale development and of this amount about $5 million was spent on research 

related to the nexus between oil shale development and water. Even with this research, we reported that there is a lack of comprehensive data on the condition of 

surface water and groundwater and their interaction, which limits efforts to monitor 

and mitigate the future impacts of oil shale development. Currently DOE funds 

most of the research related to oil shale and water resources, including research on 

water rights, water needs, and the impacts of oil shale development on water quality. Interior also performs limited research on characterizing surface and groundwater resources in oil shale areas and is planning some limited monitoring of water 

resources. However, there is general agreement among those we contacted—including state personnel who regulate water resources, federal agency officials responsible for studying water, water researchers, and water experts—that this ongoing 

research is insufficient to monitor and then subsequently mitigate the potential impacts of oil shale development on water resources. Specifically, they identified the 

need for additional research in the following areas: 

• Comprehensive baseline conditions for surface water and groundwater quality 

and quantity. Experts we spoke with said that more data are needed on the 

chemistry of surface water and groundwater, properties of aquifers, age of 

groundwater, flow rates and patterns of groundwater, and groundwater levels 

in wells. 

• Groundwater movement and its interaction with surface water. Experts we 

spoke with said that additional research is needed to develop a better understanding of the interactions between groundwater and surface water and of 

groundwater movement for modeling possible transport of contaminants. In 

this context, more subsurface imaging and visualization are needed to build 

geologic and hydrologic models and to study how quickly groundwater migrates. Such tools will aid in monitoring and providing data that does not currently exist. 

In addition, we found that DOE and Interior officials seldom formally share the 

information on their water-related research with each other. USGS officials who 

conduct water-related research at Interior and DOE officials at the National Energy 

Technology Laboratory (NETL), which sponsors the majority of the water and oil 

shale research at DOE, stated they have not talked with each other about such research in almost 3 years. USGS staff noted that although DOE is currently sponsoring most of the water-related research, USGS researchers were unaware of most 

of these projects. In addition, staff at DOE’s Los Alamos National Laboratory who 

are conducting some water-related research for DOE noted that various researchers 

are not always aware of studies conducted by others and stated that there needs 

to be a better mechanism for sharing this research. Based on our review, we found 

there does not appear to be any formal mechanism for sharing water-related research activities and results among Interior, DOE, and state regulatory agencies in 

Colorado and Utah. The last general meeting to discuss oil shale research among 

these agencies was in October 2007, but there have been opportunities to informally 

share research at the annual Oil Shale Symposium, such as the one that was conducted at the Colorado School of Mines in October 2010. Of the various officials with 

the federal and state agencies, representatives from research organizations, and 

water experts we contacted, many noted that federal and state agencies could benefit from collaboration with each other on water-related research involving oil shale. 

Representatives from NETL stated that collaboration should occur at least every 6 

months. 

As a result of our findings, we made three recommendations in our October 2010 

report to the Secretary of the Interior. Specifically, we stated that to prepare for 

possible impacts from the future development of oil shale, the Secretary should direct the appropriate managers in the Bureau of Land Management and the U.S. Geological Survey to 

• establish comprehensive baseline conditions for groundwater and surface 

water quality, including their chemistry, and quantity in the Piceance and 

43 

Uintah Basins to aid in the future monitoring of impacts from oil shale development in the Green River Formation; 

• model regional groundwater movement and the interaction between groundwater and surface water, in light of aquifer properties and the age of groundwater, so as to help in understanding the transport of possible contaminants 

derived from the development of oil shale; and 

• coordinate with the Department of Energy and state agencies with regulatory 

authority over water resources in implementing these recommendations, and 

to provide a mechanism for water-related research collaboration and sharing 

of results. 

Interior generally concurred with our recommendations. In response to our first 

recommendation, Interior commented that there are ongoing USGS efforts to analyze existing water quality data in the Piceance Basin and to monitor surface water 

quality and quantity in both basins but that it also plans to conduct more comprehensive assessments in the future. With regard to our second recommendation, 

Interior stated that BLM and USGS are working on identifying shared needs for 

modeling. Interior underscored the importance of modeling prior to the approval of 

large-scale oil shale development and cited the importance of the industry’s testing 

of various technologies on federal RD&D leases to determine if production can occur 

in commercial quantities and to develop an accurate determination of potential 

water uses for each technology. In support of our third recommendation to coordinate with DOE and state agencies with regulatory authority over water resources, 

Interior stated that BLM and USGS are working to improve such coordination and 

noted current ongoing efforts with state and local authorities. 

In conclusion, Mr. Chairman, attempts to commercially develop oil shale in the 

United States have spanned nearly a century. During this time, the industry has 

focused primarily on overcoming technological challenges and trying to develop a 

commercially viable operation. However, there are a number of uncertainties associated with the impacts that a commercially viable oil shale industry could have on 

water availability and quality that should be an important focus for federal agencies 

and policymakers going forward. 

Chairman Lamborn, Ranking Member Holt, and Members of the Committee, this 

completes my prepared statement. I would be pleased to respond to any questions 

that you may have at this time. 


68237.002.eps
44 

Contact and Staff Acknowledgments 

Contact points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this testimony. For further information about this testimony, please contact Anu K. Mittal, Director, Natural Resources and Environment 

team, (202) 512–3841 or mittala@gao.gov. In addition to the individual named 

above, key contributors to this testimony were Dan Haas (Assistant Director), 

Quindi Franco, Alison O’Neill, Barbara Timmerman, and Lisa Vojta. 

GAO’s Mission 

The Government Accountability Office, the audit, evaluation, and investigative 

arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates 

federal programs and policies; and provides analyses, recommendations, and other 

assistance to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. 

GAO HIGHLIGHTS 

August 24, 2011 

ENERGY DEVELOPMENT AND WATER USE 

Impacts of Potential Oil Shale Development on Water Resources 

Why GAO Did This Study 

Oil shale deposits in Colorado, Utah, and Wyoming are estimated to contain up 

to 3 trillion barrels of oil—or an amount equal to the world’s proven oil reserves. 

About 72 percent of this oil shale is located beneath federal lands managed by the 

Department of the Interior’s Bureau of Land Management, making the federal government a key player in its potential development. Extracting this oil is expected 

to require substantial amounts of water and could impact groundwater and surface 

water. 

GAO’s testimony is based on its October 2010 report on the impacts of oil shale 

development (GAO–11–35). This testimony summarizes (1) what is known about the 

potential impacts of oil shale development on surface water and groundwater, (2) 

what is known about the amount of water that may be needed for commercial oil 

shale development, (3) the extent to which water will likely be available for such 

development and its source, and (4) federal research efforts to address impacts to 

water resources from commercial oil shale development. For its October 2010 report, 

GAO reviewed studies and interviewed water experts, officials from federal and 

state agencies, and oil shale industry representatives. 

What GAO Found 

Oil shale development could have significant impacts on the quality and quantity 

of water resources, but the magnitude is unknown because technologies are not yet 

commercially proven, the size of a future industry is uncertain, and knowledge of 

current water conditions is limited. In the absence of effective mitigation measures, 

water resources could be impacted by disturbing the ground surface during the construction of roads and production facilities, withdrawing water from streams and 

aquifers for oil shale operations, underground mining and extraction, and discharging waste waters produced from or used in such operations. 

Commercial oil shale development requires water for numerous activities throughout its life cycle, but estimates vary widely for the amount of water needed to commercially produce oil shale primarily because of the unproven nature of some technologies and because the various ways of generating power for operations use differing quantities of water. GAO’s review of available studies indicated that the expected total water needs for the entire life cycle of oil shale production range from 

about 1 barrel (or 42 gallons) to 12 barrels of water per barrel of oil produced from 

in-situ (underground heating) operations, with an average of about 5 barrels, and 

from about 2 to 4 barrels of water per barrel of oil produced from mining operations 

with surface heating, with an average of about 3 barrels. 

GAO reported that water is likely to be available for the initial development of 

an oil shale industry but that the size of an industry in Colorado or Utah may eventually be limited by water availability. Water limitations may arise from increases 

in water demand from municipal and industrial users, the potential of reduced 

water supplies from a warming climate, the need to fulfill obligations under interstate water compacts, and decreases on withdrawals from the Colorado River system 

to meet the requirements to protect threatened and endangered fish species. 

45 

The federal government sponsors research on the impacts of oil shale on water 

resources through the Departments of Energy (DOE) and Interior. Even with this 

research, nearly all of the officials and experts that GAO contacted said that there 

are insufficient data to understand baseline conditions of water resources in the oil 

shale regions of Colorado and Utah and that additional research is needed to understand the movement of groundwater and its interaction with surface water. Federal 

agency officials also told GAO that they seldom coordinate water-related oil shale 

research among themselves or with state agencies that regulate water. 

In its October report, GAO made three recommendations to the Secretary of the 

Interior to prepare for the possible impacts of oil shale development, including the 

establishment of comprehensive baseline conditions for water resources in the oil 

shale regions of Colorado and Utah, modeling regional groundwater movement, and 

coordinating on water-related research with DOE and state agencies involved in 

water regulation. The Department of the Interior generally concurred with the recommendations. GAO is making no new recommendations at this time. 

Mr. LAMBORN. All right. Thank you. 

Thank each one of you for your good testimony, for the facts that 

you brought to our attention. 

I would now like to recognize myself to begin the first round of 

questions. Professor Spinti, you gave, I believe, a different estimate 

of the per barrel use of water for barrel of extracted petrochemicals. Is that correct? I think you said one and a half? 

Ms. SPINTI. Equals 2.5 barrels of water per barrel of oil produced. 

That number is from previously published research. We published 

that report about a year ago. We did not query the operating companies. 

Mr. LAMBORN. OK. Now does that take into account recycling? 

Ms. SPINTI. Yes. That is—in chemical engineering terms, that is 

what we call makeup water. So that is the what we will call water 

usage per barrel is actually more—— 

Mr. LAMBORN. Could you speak into the microphone? 

Ms. SPINTI. The overall water use is actually more than that, but 

you are recycling a lot of that. And so, the water that you have to 

add, the makeup water, is 2.5 barrels per barrel of water. 

Mr. LAMBORN. OK. How much of that is direct use versus indirect use? Like if there is a facility that is newly built that brings 

in water for people to live as a small village, let’s say, to me, that 

would be an indirect use. 

Ms. SPINTI. Yes. So that number is only direct use. 

Mr. LAMBORN. Direct use. Good. 

Ms. SPINTI. That doesn’t include the additional water demand 

from the town and the number of employees that are there. 

Mr. LAMBORN. All right, thank you. 

Dr. Sladek, what are some of these other countries doing to bring 

in innovative technology that could be of use here in the United 

States to reduce the environmental impact of oil shale production? 

Dr. SLADEK. Well, one of China’s projects is to add a large Canadian retort, which has been tested fairly thoroughly in Australia 

with some disappointing results. So the developers of that technology are familiar with the environmental consequences of doing 

things unwisely. So I think that experience will be reflected. 

Of the other countries, Jordan is a very small country, and their 

hope, I believe, is to finance a lot of their oil shale development 

with funding from international banks, such as the World Bank 

and big commercial banks. Those banks are constrained in their 

lending practices by the Equator principles, which is a set of enviVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
46 

ronmental and social standards which the banks agree to maintain 

in any project that they support with their financing. And if the 

projects do not meet those requirements, then the loans will not be 

made. 

So Jordan in particular is under the gun to make sure that the 

industry is developed in a responsible manner in compliance with 

world standards for environmental and social protection. 

Now the specifics of what they are doing, what types of equipment they are adding to their plants to ensure that that compliance occurs, I don’t know. One suggestion I have for the Government is that they try and find out by engaging in those projects 

by sharing experience and expertise with countries like Jordan that 

would be very glad to get it. 

Mr. LAMBORN. All right. Thank you. 

Professor Spinti, what is the difference between the use of water 

for a surface mining basic approach, like the retort method, versus 

the in-situ processes that companies in Colorado are researching, 

from a chemical engineering standpoint? 

Ms. SPINTI. Yes. So, actually, most of the development in Utah, 

which I am most familiar with, is surface mining. And so, it is ex 

situ. Because of the resources that are available, non-Federal resources, the resource is actually more amenable to mining. And so, 

and most of those companies are not using that much water, per 

se, in the process itself. 

So they have some sort of retort, but they require water for ancillary uses and for dust control for—so they have the spent shale 

when they are done, and so they use water—well, nobody has got 

commercial production. But you would use water to cool off the 

shale and for dust control. It turns out that those can be fairly 

large uses, the dust control. 

For in-situ production processes, one of the concerns there is 

what is left over once you are done. So, what is in the ground, and 

does it have a potential to contaminate groundwater? So how much 

flushing do you have to do once you are done producing? 

And then also the other issue in Colorado is just that some of the 

rich oil shale zones are in the aquifer, and so you have to worry 

about issues of water contamination of the aquifer with in-situ production if you are in that particular zone. In Utah, some of the 

richest zones actually don’t have that problem because they are 

below the level of one of the main aquifers. 

Mr. LAMBORN. All right. Thank you all. 

Representative Tipton? 

Mr. TIPTON. Thank you, Congressman Lamborn. 

And Mr. Sladek, I may not have caught—you mentioned rare 

earths in part of your testimony. Have there been some studies, 

when you were talking about Estonia, Jordan, Egypt, Syria, of extraction of some of the rare earths? 

Dr. SLADEK. I am not aware of any specifically aimed toward 

rare earths. Jordan has spent a great deal of time looking for uranium in their oil shale region, and they have found some. In fact, 

that introduced a substantial delay in their oil shale program because the leasing program was suspended while they attempted to 

find out if the uranium was of commercial interest. 

47 

The rare earths are a relatively new topic in world commerce, 

but an increasingly important one. I know that there have been 

very detailed studies done of the geochemistry of the Green River 

formation oil shales, and I know that data have been published on 

concentrations of rare earths in specific samples that were analyzed. That has been a long, long time ago, and I doubt that the 

data are current and probably not terribly reliable. But it is a useful thing to look at. 

You mentioned aluminum in your question to Mr. Johnson. 

There is a lot of aluminum in oil shale, and some of it is potentially 

recoverable. 

Mr. TIPTON. Since you have a little bit of background on this because it is the entire package, is lithium pretty prevalent, depending on some of the formations? 

Dr. SLADEK. Not to my knowledge, I am afraid. I do not know. 

Mr. TIPTON. OK. All right. Important issue, I think, obviously, 

because, as Ms. Spinti was noting, some of the production techniques over in China are not the best. 

Dr. SLADEK. Yes, I agree. 

Mr. TIPTON. And on the reliability end of that. 

Mr. Hagood, could you maybe give us a little bit of background 

in terms of maybe just an estimate? Obviously, listening to a lot 

of the testimony, there is a lot to take into consideration that when 

we are looking back on even an employment issue, if we were able 

to get this industry moving, were able to have that cost effective, 

what are some of the job estimates in regard to this? 

Mr. HAGOOD. Yes, I am not familiar with the job estimates, but 

I can point to maybe an analog, and that is with the oil sands industry up in Alberta. And if you consider that it has taken them 

several decades to get to a production of 1.5 million barrels per 

day, but that has resulted in a tremendous amount of employment 

in the area of Calgary and Edmonton and Fort McMurray, and also 

the side benefits associated with that, which has led to creation of 

world-class universities and research institutes, which, in turn, employ a number of individuals. 

But I can’t give you an actual estimate on that. 

Mr. TIPTON. It is probably unfair to even ask you, but do you 

know what the unemployment rate is up there? 

Mr. HAGOOD. No, I don’t. It is very low, and—— 

Mr. TIPTON. It is low? 

Mr. HAGOOD.—the cost of housing, by the way, which is another 

socioeconomic impact, but it is pretty high. 

Mr. TIPTON. Right. 

Mr. HAGOOD. In fact, Calgary, and this is just in general, associated with the entire oil and gas industry, is the largest U.S. ex-pat 

community in the world. And they actually do recruit quite heavily 

down the United States to attract welders and other folks to work 

up in Fort McMurray. 

But it is quite a healthy environment for employment. 

Mr. TIPTON. Great. Thank you. 

And Ms. Mittal, you had mentioned something that I think is 

very important as well. We seem to have a lot of entities within 

Government that fail to speak to each other or to be able to share 

48 

some of that information. And you were talking about DOE and Interior not currently sharing some of that information. 

You made a recommendation. Are you aware of any moves to actually make that happen? 

Ms. MITTAL. We did recommend that Interior and DOE, as well 

as the State regulatory officials, because they are a really important part of this process, be involved and they develop some sort 

of a formal mechanism to share information about research that 

they have currently ongoing. 

Right now, what we have found is they do not have a formal 

mechanism. So they have to rely on informal mechanisms, and 

those don’t always get the job done. 

Mr. TIPTON. And that creates uncertainty? 

Ms. MITTAL. Yes. 

Mr. TIPTON. Yes, I am sure it does. I just wanted to get it clarified because I made the same note that Congressman Lamborn did 

in that we have in terms of large volume, a pretty significant discrepancy between your estimate in terms of water usage versus 

Ms. Spinti’s estimate of water usage. 

Ms. MITTAL. I think the big difference between our estimate and 

some of the studies that are out there is we looked at the whole 

life cycle of oil shale production. There are some studies that only 

look at the direct impacts. So that is the actual production of the 

oil versus we looked at the whole life cycle. 

So you are starting with—we took every single activity that is involved in the oil shale life cycle production, direct activities as well 

as indirect activities. We grouped them into five groups, and then 

we looked at the most optimistic water use scenarios and the most 

pessimistic water use scenarios, and we added all of those up. 

Because what we wanted to do was provide a comprehensive, 

consistent, and complete package of information. Obviously, when 

we talked to industry and water experts, they told us that the extremes in our ranges probably will not get met. So, it will be somewhere in the middle. 

So that is why the three to five range that I mentioned in my 

statement, that is probably going to be where we end up. 

Mr. TIPTON. And it would probably be hard to measure, but it 

sounds, from what you are describing to me, at least, that it is kind 

of a static model as opposed to a dynamic model that you were 

really looking at? 

Ms. MITTAL. Right. 

Mr. TIPTON. Not anticipating with current technology, without 

development processes, that maybe it will actually reduce water 

consumption. Is that accurate? 

Ms. MITTAL. Absolutely. Absolutely. That was one thing that was 

very clear when we talked to the industry. Reducing water use is 

very high on their radar screen. They are looking for ways to reduce that. The more they can come up with new technologies that 

limit that use, the more we will go toward that lower range. 

But the bottom line is there is a lot of uncertainty right now, as 

Ms. Spinti said, about the reclamation and the in-situ process. We 

don’t know how many times we are going to have to rinse the retort zone. It could be two or three times like some researchers expect. That is about a barrel of water. If we have to do 20 rinses, 

49 

that could be over 5 barrels of water, and that is the uncertainty 

that is part of the equation right now. 

Mr. TIPTON. Great. Thank you. 

Mr. LAMBORN. All right. Thank you. 

Mr. Hagood, in preparing for this hearing, we invited the Department of Energy to also come and testify, but they did not want to 

do so because they have no current oil shale programs. So they 

didn’t feel they had a lot to offer. 

Do you believe that basic research and investment in domestic oil 

shale development would be a good thing for the Department of 

Energy to be doing? And larger than that, will this help—and I 

think I know what you are going to say. But will that help us reduce our dependence on foreign sources of energy? 

Mr. HAGOOD. Relative to your first comment, indeed, basic research is very important to this topic. And given, as I mentioned 

before, the size of the resource I think is essential and a tremendously good investment. 

But also add that it needs to be more than just basic research. 

It needs to be applied and moving toward demonstration and, as 

mentioned earlier, toward reducing the risks associated with deployment. 

Second question again? 

Mr. LAMBORN. How would this help reduce our dependence on 

foreign energy? 

Mr. HAGOOD. So, currently, we import between 50 to 60 percent 

of our oil primarily directed toward transportation. The current use 

today in the United States is roughly between 18 million and 19 

million barrels per day. Five million of that is produced domestically. 

Therefore, if you look at the top providers of our oil from import, 

they basically consist of Canada, Nigeria, Saudi Arabia, Venezuela, 

and I forgot the last one. 

Voice. Mexico. 

Mr. HAGOOD. Thank you very much. Mexico. 

[Laughter.] 

Mr. HAGOOD. And which, by the way, has a declining reserve. So 

if you look at all of that, and 2.5 million barrels come from Canada—most of that actually from the oil sands, increasingly so—it 

would be very important for the United States to reduce its vulnerability on accepting imports from those other sources. So it is really 

a risk management aspect to me toward developing our own resources and managing that risk more smartly over the long term. 

Mr. LAMBORN. As a follow-up, is the particular products that are 

produced by certain techniques, the blend of petrochemical, the resulting blend, is that of significance? Like if it is more weighted toward what would normally take more refining because some of the 

refining, in effect, is already done in the process? 

Mr. HAGOOD. I am not sure I am capturing the question, Chairman. 

Mr. LAMBORN. Like if you get more jet fuel, for instance, than 

you would if from a heavy like tar sand? 

Mr. HAGOOD. Yes, I can’t speak to that, Chairman. 

Mr. LAMBORN. OK. 

50 

Mr. HAGOOD. But indeed, I think in general you can take a number of these types of resources, whether it is oil sands or tar sands 

or oil shale, and convert them into a number of different types of 

products. Currently, the U.S. does have significant refining capacity to take a lot of that import or domestic resource to refine to a 

number of different products. 

Mr. LAMBORN. OK. And then my last question for you or anyone 

on the panel is what can Congress be doing in a responsible way 

to make sure that we are continuing to look at this potentially valuable resource and not drop the ball? 

I am going to start with you, Mr. Hagood. 

Mr. HAGOOD. Well, I think my recommendation is, and again, it 

goes back to this is a world-class resource. It is going to be longlived. It will be with us through this entire century, and it is important for us to steward that in an environmentally responsible 

way, but to use it and develop it for our energy security, but also 

for our economy. 

So I do believe that this deserves—at least from the research 

perspective, deserves a more focused and integrated approach to 

address the challenges associated with development of these resources. It is being done, albeit with oil sands, in Alberta, but it 

is a proactive, can-do attitude to develop those resources. And if 

they find a problem, they put their money where their mouth is to 

address the problem through both Government and industry. 

I think that same type of attitude may be exercised through a 

program focused in western oil shale is needed. 

Mr. LAMBORN. OK. Thank you. 

Anyone else on the panel? Doctor? 

Dr. SLADEK. Yes, I would like to second that, and also this outreach program that I alluded to earlier to put the Department of 

Energy back in the oil shale business and specifically to track what 

is going on in other countries and to join in those projects. 

Not just because it is nice to help other people, but because you 

can bring information back to this country that will be very helpful 

in the emergence of our industry. Water conservation, for example, 

is even more of an issue in Jordan than it is in the Western United 

States. They have no water. And what they do have in the ground 

is committed not only to their own people, but the surrounding 

countries. 

They must reduce water consumption in oil shale production. 

They could use some help in doing that, and the help that is provided could come back to help us. 

I would also like to supplement Dr. Hagood’s response about 

whether shale oil is a better source of jet fuel and diesel fuel than 

it is of other petrochemicals. The Green River formation of crude 

oil shale is a better source of the middle distillates, jet fuel and diesel fuel specifically, than it is of gasoline. So, in terms of providing 

our motor fleet and our trains, it is a good source of energy for 

doing that. 

Mr. LAMBORN. OK. Thank you. 

Either one of you? 

Ms. SPINTI. I always have something to say. 

Mr. LAMBORN. Good. 

51 

Ms. SPINTI. OK. So just to comment, there was actually a really 

good policy paper that came out that I can send to your assistants 

that talks about some of these policy issues and how they affect the 

markets. 

Mr. LAMBORN. Please do. 

Ms. SPINTI. And one of those issues is that we were just—I was 

actually traveling in Scandinavia this summer, driving a nine-passenger diesel van and gasoline there is very expensive, or diesel. 

We were dreading every time we had to go fill up. But we were getting like 45 to 50 miles per gallon. 

And you get a much higher efficiency with a diesel engine, but 

the problem is the way certain laws have been written in the U.S. 

favor gasoline. Anyway, that paper has a very good explanation of 

that. 

So it depends on what you want to drive demand for. But if you 

want to drive demand for diesel fuel, then you need to look at the 

laws that are driving demand for gasoline because there are certainly technical advantages to having a diesel engine. 

OK. So there are two other comments I wanted to make. Our 

funding comes through DOE, the National Energy Technology Laboratory so I guess I am a little surprised at their response. Maybe 

they are not aware of us? 

We have been working for about the last 5 years, and we are the 

only funded program in the U.S. So, the problem in academia is, 

of course, as a professor, a research professor especially, you are 

only working on what you are funded for. Now that we are at the 

end of 5 years and we are nearing the end of our funding, we have 

assembled what we feel a very strong group of researchers in law, 

economics, science, and engineering. 

And the problem is if there is no more money, all those people 

go off and work on other problems. So if you want smart people 

working on problems, then there has to be a funding source so that 

you are not jumping from one thing to another every 4- or 5-year 

cycle. 

Then, finally, I come from the simulation group, computational 

fluid dynamics, and we feel strongly that the future is simulation, 

and that if we want to have these simulation tools that will give 

us quantified predictivity. So what is our uncertainty, and how well 

do we know that uncertainty? So that we can say not just, well, 

this might happen if you build this. But we can say, you know 

what, we have done these simulations, and we can tell you that 

this is the uncertainty of what will happen, and here is your answer. 

To be able to do that, we need to have data. That means we have 

to be able to have companies and national laboratories and other 

people doing research willing to share their data so that we can do 

this validation. 

Thank you. 

Mr. LAMBORN. And briefly, Ms. Mittal? 

Ms. MITTAL. Just very briefly, I would ask that Congress hold Interior accountable for collecting the baseline water data that we 

need. Because if we don’t have that baseline information now before the industry starts, we will not be able to attribute any 

changes in water resources back to the oil shale industry. 

52 

So it really impacts their ability to monitor and mitigate future 

impacts. So hold them accountable for gathering that data. 

Mr. LAMBORN. OK. Thank each one of you. 

Representative Tipton? 

Mr. TIPTON. Thank you. I am good. 

Mr. LAMBORN. OK. I would like to ask all the witnesses to please 

respond in writing if any of the members of the Committee submit 

questions to you. 

Mr. LAMBORN. Thank you for being here, and we appreciate it. 

I will now call the last panel up, and that consists of Mr. Dan 

Whitney, the Upstream Americas Heavy Oil Development Manager 

for Shell Exploration and Production Company; Mr. Gary Aho, 

Board Member and former Chairman of the National Oil Shale Association; Mr. Brad McCloud, Executive Director of Environmentally Conscious Consumers for Oil Shale; and Mr. Jim Spehar, 

probably no stranger here, former Mayor of Grand Junction and 

former Mesa County Commissioner. 

Thank you all for being here. 

As I mentioned earlier with the two previous panels, your written testimony will appear in full in the hearing record. So I ask 

that you keep your oral statements to 5 minutes, as outlined in our 

invitation letter to you. 

The microphones are automatic. You don’t have to press any buttons. The timing lights will turn yellow after 4 minutes and red 

after 5 minutes. 

We will now begin with our first witness, and that would be Mr. 

Whitney. 

STATEMENT OF DAN WHITNEY, UPSTREAM AMERICAS HEAVY 

OIL DEVELOPMENT MANAGER, SHELL EXPLORATION AND 

PRODUCTION COMPANY 

Mr. WHITNEY. Chairman Lamborn, Representative Tipton, thank 

you for having me here today. 

I am pleased to have the opportunity to speak with you about oil 

shale development. Today, I would like to focus on three points. 

First is the growing world energy demand and our Nation’s need 

for secure supplies, Shell’s commitment to a cautious approach on 

oil shale, and finally, the importance of future regulatory stability 

in assuring new energy development. 

Global energy demand is high and rising constantly. So is competition for energy resources and the investment needed to develop 

them. Growing populations and economies in China, India, and 

elsewhere will at least double demand by 2050. 

Today, about 80 percent of the world’s energy comes from coal, 

oil, and natural gas. At most, nuclear and renewable sources might 

meet a third of the world’s needs by mid century. Fossil fuels will 

supply the rest. While the mixed percentage will be a little bit 

lower, demand growth means that the world will actually be burning more fossil fuel at mid century than it does today. 

Most of that increase will have to come from sources undeveloped 

and even undiscovered today and often in remote and challenging 

locations, such as the Arctic and ultra deep water, but not always. 

As you know, there are vast unconventional oil resources here in 

Colorado in the form of oil shale, some of the world’s richest hydroVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
53 

carbon deposits. Properly developed, they could play a major role 

in U.S. energy security. 

The U.S. Geological Survey and others estimate recoverable U.S. 

oil shale reserves at more than 800 billion barrels, enough to supply the U.S. for more than a century. Shell is committed to a cautious approach in our oil shale efforts. Since the early 1980s, Shell 

has pursued steady research and development of the in-situ conversion process as a means to produce from oil shale in an environmentally responsible and socially sustainable manner. 

This has required dedicated scientific application and a significant financial investment, many tens of millions of dollars. Oil 

shale’s long research cycle time and high upfront capital costs need 

consistent Government policy and regulatory certainty. Gaining experience and building industry capacity must occur before new 

technology can contribute meaningfully to energy supply. This requires billions of dollars and patient investment spread over decades. 

Predictable rules, created in a thorough, well understood, and legally established process, are critical to that type of long-term commitment. Unfortunately, weakening regulatory certainty is the 

trend and a negative for U.S. energy development. 

A case in point is the BLM’s reopening of the 2008 PEIS covering 

oil shale in the Piceance Basin. The existing, fully vetted, comprehensive 1,800-page PEIS is less than 3 years old. No material 

new information has emerged to merit this revisit in so short a 

time. The entire exercise ignores the comprehensive framework of 

regulatory checks and balances already in place, including site-specific NEPA reviews that will apply to every future oil shale project 

under Federal jurisdiction. 

Since the stated concerns are already covered, this PEIS fresh 

look is a waste of taxpayer money and a deterrent to industry confidence and future capital investment. Shell firmly believes that if 

foreign technology and those being tested by other energy companies can be proven through the RD&D program, we can unlock a 

significant long-term domestic energy source for the U.S. To do 

this, industry needs a regulatory regime that fosters innovation 

and encourages production growth. 

An environmentally driven, no development policy in the 

Piceance is unwise. Social and economic benefits, national energy 

needs, and other realities must be considered. 

Our country is in resource competition with the world. We need 

energy in every form, and we are sitting on the world’s largest and 

most concentrated energy resource. It can be developed responsibly, 

and it will be needed maybe sooner rather than later. 

Thank you for listening to my testimony. 

[The prepared statement of Mr. Whitney follows:] 

Statement of Dan Whitney, Heavy Oil Development Manager, 

Shell Exploration and Production Company 

Chairman Lamborn, members of the Subcommittee on Energy and Minerals. I am 

pleased to have this opportunity to speak with you today on the topic of oil shale 

development. 

I will focus on three points: 

1. Growing world energy demand and our nation’s need for secure supplies, 

2. Shell’s commitment to a cautious approach on oil shale, and 

54 

3. The importance of future regulatory stability in assuring new energy development. 

Global energy demand is high and increasing constantly. So is international competition for limited energy resources and the investments needed to develop them. 

Growing populations and economies in China, India, and elsewhere will at least 

double energy demand by 2050. Some analysts say it could triple. 

One thing certain is we will need a lot more energy. The world will depend on 

fossil fuels for decades until technology and economics can deliver a larger contribution by alternative energy sources. 

Today about 80% of the world’s energy comes from coal, oil and natural gas. At 

most, nuclear and renewable energy sources might meet a third of the world’s needs 

by mid-century—fossil fuels will supply the rest. And, while the percentage will be 

a little lower, demand growth means the world will actually be burning more fossil 

fuel at mid-century than it does today 

Most of that increase will have to come from sources undeveloped and even undiscovered today. We will need every available energy source—renewable, alternative 

and conventional—and greater efficiency too. 

As you know, there are vast unconventional oil resources here in Colorado, in the 

form of oil shale—some of the world’s richest hydrocarbon deposits. Properly developed, they could be a major component of US energy security. 

The U.S. Geological Survey (USGS) estimates recoverable reserves at more than 

800 billion barrels, enough to supply the US for more than a century at current consumption rates. 

The challenge of developing a commercial oil shale industry starts with its geologic state. The Green River Formation is a carbonate rock, generally marlstone that 

is very rich in kerogen. This source of oil has not had the natural forces of pressure 

and temperature over the millennia to convert it to oil and gas. So, unlike conventional oil and gas operations, oil shale cannot be pumped directly from the ground. 

Oil Shale must be processed either above ground or in place (in situ) to convert the 

kerogen into oil. 

Shell is committed to a cautious approach in oil shale research and development. 

Shell has pursued the technical and commercial development of the In situ Conversion Process (ICP) for oil shale since the early 1980s as a means to produce from 

oil shale—in an environmentally responsible and socially sustainable manner. This 

has required considerable dedicated scientific application and significant financial 

investment—many tens of millions of dollars. 

To date, through persistence and much effort, a logical progression of work has 

been completed from desk top studies, to laboratory scale testing, to prototype scale 

testing, and finally to field pilot testing in Colorado. 

Shell’s seven previous Colorado pilot projects have tested broad technology 

themes, including: 

(1) Demonstrating that the technology works, 

(2) Measuring energy balance and recovery efficiency necessary to estimate 

commercial project economics, 

(3) Producing and measuring the properties of ICP oil and gas, 

(4) Proving that the groundwater can be protected, and 

(5) Testing the effectiveness of a variety of heat delivery methods. 

In the process, Shell has carried out extensive pre-operational environmental assessments. Shell has given careful attention to archaeologically sensitive areas by 

completely assessing and avoiding such areas, and has cooperated fully with agencies such as the State Historical Preservation Office and BLM to identify and avoid 

areas of critical environmental concern, including establishing conservation easements to provide permanent protection of certain areas. 

Shell also funds research into environmental restoration and recently established 

a professorial chair in the subject at Colorado State University. Shell has also demonstrated, through its own research and field trials, that disturbed lands can be returned to beneficial uses that are equivalent to the pre-disturbance conditions, and 

was recognized by the BLM for these efforts. 

The long cycle time of research and high up-front capital requirements of an oil 

shale project, need broad and consistent government support to establish a commercial industry. Supporting government policy and regulatory certainty are necessary 

for private industry to reasonably assess risks and economics, and be confident in 

that assessment, so that the billions of dollars in required investment can be made. 

Commercial scale technologies with economically attractive recovery efficiency and 

acceptable environmental impacts are prerequisite for success. The road to commercialization is likely to be measured in decades not years—a long time horizon is necessary to allow development to occur through the ‘‘bust and boom’’ oil and gas price 

cycles. 

55 

This extended time frame for supply growth and commercial viability is not 

unique to unconventional oil. Looking back through history, it consistently takes 

around 30 years for new forms of energy to achieve 1 percent market share after 

a commercial business is established. Biofuels are just now reaching 1 percent of 

the world oil market, or about 0.5 percent of total energy, after decades of development and government support. Wind may get to the 1 percent mark in the next few 

years, nearly three decades after the first large wind farms were built in Denmark 

and here in the United States. 

Gaining experience and building industry capacity must occur before a new technology can contribute meaningfully to energy supply—and this requires billions of 

dollars in patient investment over decades in the hope of eventual growth. Regulatory stability is critical. This kind of commitment depends on predictable rules created in a well understood, legally established and exhaustive process. 

Weakening regulatory certainty is a negative trend for US energy development. 

A key case in point is the BLM’s re-opening of the 2008 PEIS covering Piceance 

Basin oil shale on the basis of ‘‘concerns’’ already fully covered by existing regulatory programs. 

Potential ramifications of re-writing the existing regulations include: • lower capital investment, • lower domestic oil production, • higher oil imports—(costing hundreds billions that might otherwise be invested within the US,) • higher unemployment (a natural consequence of reduced investment,) • lower tax revenues from royalties, federal and state corporate and individual 

incomes taxes, severance tax, and property and sales taxes, and • lower overall economic growth. 

The existing, fully vetted, comprehensive, 1800 page PEIS is less than three years 

old. No substantive new information has emerged that merits this revisit in such 

a short time. 

The entire exercise ignores the comprehensive framework of regulatory checks 

and balances already in place in the form of environmental (and other) laws, including site specific NEPA review, that will apply to every future oil shale project under 

federal jurisdiction. 

Remarkably, all five areas proposed for removal from development as identified 

in the Notice (i.e. those with wilderness characteristics, ‘‘very rare or uncommon’’ 

designation, sage grouse habitat, ‘‘areas of critical environmental concern’’, and 

areas made off limits in the original PEIS) are already either 

(a) precluded from development by Federal or State statutes, 

(b) precluded from development under the original PEIS, or 

(c) may be precluded under the existing leasing authority assigned to BLM land 

managers. 

Given that there are already adequate checks and balances provided in existing 

regulatory programs to accomplish the stated basis for this PEIS, Shell views the 

‘‘fresh look’’ at the PEIS as an inefficient and unnecessary use of taxpayer money 

and as a significant deterrent to capital investment by Shell and others in the energy industry. 

While questions and challenges remain regarding the future implementation of oil 

shale technology, Shell believes that commitment by the Federal Government to 

maintaining a regulatory environment that encourages investment in oil shale 

RD&D, as defined in the 2005 Energy Act and the subsequent regulations including 

the 2008 PEIS, is critical to long term success. 

The lack of policy and regulatory consistency from one administration to another 

makes the investment climate even more risky and potentially untenable. 

For Shell to make informed investment decisions, we must be able to predict the 

likely costs of future development. This includes royalties, bonds, reclamation requirements, lease duration, diligent development requirements, commercial leas 

conversion process and other aspects of permitting, lease administration, and commercial operation. 

Given the substantial investments necessary for oil shale pilots, research and 

commercial facilities, regulatory uncertainty has significant adverse impact on 

Shell’s interests. To put it another way, the 2008 Oil Shale Rules and associated 

regulatory processes provide certainty and basis for investment decision. Reopening 

elements, of which the PEIS is one, and the prospect of future changes removes that 

certainty. 

Shell firmly believes that if our technology and those being tested by other energy 

companies can be proven through RD&D testing, we can unlock a significant long 

term domestic energy source for the US. To do this, industry needs a regulatory environment that fosters innovation and results in production growth. This is accomVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
56 

plished by providing access to acreage with sufficient oil shale resources combined 

with long-term stable fiscal regimes and regulatory processes that provide industry 

the certainty and time needed to develop oil shale. 

Our country is in competition with the world for energy resources. We need energy in every form, and we are sitting on the largest and most concentrated energy 

resource on the planet. And it will be needed, potentially sooner rather than later. 

The benefits are huge. Consider this: an acre disturbed for corn production might 

generate the energy equivalent of 10 barrels of oil per year, and an acre of conventional oil and gas production might generate the equivalent of 10,000 barrels of oil, 

but an acre of oil shale in the Piceance Basin of Colorado has the potential to 

produce well over 1,000,000 barrels of oil. So the energy produced per acre disturbed 

is well over 100 times greater than any other known form of energy development. 

Colorado’s oil shale is literally the richest and most concentrated hydrocarbon energy resource on the planet. 

Shell has often said, we intend to develop oil shale in a manner that is economically viable, environmentally responsible and socially sustainable. If one only focuses on environmental concerns without also considering the socioeconomics, national energy needs, and the facts and realities of the situation, it becomes clear 

that a ‘‘no development’’ policy is unsustainable. As NEPA requires, the environmental and social impacts and benefits of any proposed action need to be considered. 

Our country needs energy in every form. There is clearly a path forward where our 

energy needs are supplemented with oil shale, while managing and mitigating impacts of development. 

Thank you for considering my testimony. 

Mr. LAMBORN. All right. Thank you. 

Mr. Aho? 

STATEMENT OF GARY AHO, BOARD MEMBER/FORMER 

CHAIRMAN, NATIONAL OIL SHALE ASSOCIATION 

Mr. AHO. Thank you, Mr. Chairman and Mr. Tipton, for the opportunity to speak here today. 

My name is Gary Aho. I am here today representing the National 

Oil Shale Association. I am an industry representative. I have over 

35 years of experience with oil shale, starting out as a chief engineering, becoming a manager, vice president, and eventually the 

president of two of the oil shale companies that have been active 

in the Western States. 

The National Oil Shale Association is a not-for-profit organization with the goal of educating the public and providing factual information on oil shale. Our members consist of corporations, university and research groups, national laboratories, and individuals. 

We print written materials that are carefully scrutinized to assure 

that all statements are accurate and supported by factual data and 

sound references. We are not a lobbying organization. 

Today, I would like to enter for the record our most recent 2010 

publication, entitled ‘‘Oil Shale: America’s Untapped Energy 

Source.’’ The purpose for this newest publication is to present facts 

about oil shale, lay out the benefits to the Nation and to this region, present challenges facing the development of oil shale, and 

discuss a way to arrest many of the misconceptions that persistently surround oil shale. 

This NOSA publication was carefully prepared and edited by experienced oil shale veterans, each with many years of experience 

in trying to get an oil shale industry started in the United States. 

Today, there are just a few key points for the time I have allotted 

that I would like to make from this particular publication. 

57 

First of all, as we have heard, the U.S. has nearly 70 percent of 

the world’s oil shale resources, and the deposits in the Western 

United States contain more oil than the world’s proven reserves of 

conventional oil. At a time like this, when our Nation is going 

through tremendous economic uncertainty, developing oil shale in 

the Western United States would create tens of thousands of highpaying jobs, reduce the Nation’s dependency on foreign oil, improve 

the balance of trade, enhance national security, provide stimulus to 

the economy, and generate tax revenues for all levels of Government. 

There are already a number of proven and unproven technologies 

to produce shale oil, and production is occurring, as we have heard 

here today, in the countries of Estonia, Brazil, and China. We believe that shale oil can be produced in the United States safely and 

in an environmentally responsible manner. Industry and research 

organizations will figure out the best technologies if the incentives 

to do so exist and if the roadblocks are minimized. 

The Federal Government through the BLM controls only 70 percent of the Western oil shale resources and some of the best resources. However, there is currently no Federal oil shale leasing 

program. Despite the fact that oil shale was placed under the Mineral Leasing Act of 1920 and was to be made available for public 

leasing, here it is 90 years later and, shame on us, we still don’t 

have a leasing program in this country. 

As a nation, we have made a number of efforts to develop oil 

shale, and there have been many successful research programs 

completed over the past 90 years. However, we seem to lack the national resolve to keep a sustained oil shale program moving forward, and we have heard that again today with the lack of budgets, and these programs within the DOE, for example, start and 

stop. 

The most recent unconventional fuels legislation was the Energy 

Security Act of 2005 that laid out a program and mandated certain 

research and leasing activities. While that program got off to a 

great start, it, too, appears to be floundering, despite the fact that 

the actions required therein are very explicit. 

NOSA believes that the BLM should make lands available for 

lease. These lands should have terms, including rents and royalties, which are favorable for this capital-intensive, high-risk, unconventional fuels industry. Sufficient regulations and environmental 

rules and regulations already exist on the books. Industry should 

be allowed to select the technologies since it is industry that takes 

the investment risks. 

It should be up to industry to conduct the research and develop 

the best technologies, realizing that the technologies will evolve 

with time and experience. Just because the BLM leases oil shale 

property to a corporation, there is no assurance that the project 

will develop. Industry must still design the project, secure its permits, comply with NEPA, secure water and other services, get the 

buy-in of the stakeholders, arrange financing, and so forth. 

The burden falls on industry. BLM must simply make leases 

available. If it is in the Nation’s best interest to develop oil shale, 

and we believe it is, then the Government should make the land 

58 

available, expedite the permitting process in cooperation with State 

and local agencies, and then let industry make it happen. 

Industry needs a clear, consistent Federal program and a national commitment to develop oil shale. Access to lands and regulatory certainty are crucial to corporations starting a new capitalintensive industry such as oil shale. 

I thank you for the opportunity to appear here today. The National Oil Shale Association feels this hearing is very timely, and 

we thank you for your vision and your willingness to address the 

impeding development of oil shale, America’s untapped energy 

source. 

Thank you. 

[The prepared statement of Mr. Aho follows:] 

Statement of Gary D. Aho on behalf of the National Oil Shale Association 

Mr. Chairman and Members of the Subcommittee, my name is Gary D. Aho and 

I am here today representing the National Oil Shale Association, a not-for-profit organization with the goal of educating the public and providing factual information 

on oil shale. Our members consist of corporations, university research groups, national laboratories and individuals. We print written materials that are carefully 

scrutinized to assure that all statements are accurate and supported by factual data 

and sound references. We are not a lobbying organization. 

Today I would like to enter for the record our most recent 2010 publication entitled ‘‘Oil Shale, America’s Untapped Energy Source’’. This publication is intended 

to (1) present facts about oil shale, (2) layout benefits to the nation and the region, 

(3) present the challenges facing the development of oil shale, and (4) discuss and 

lay to rest the misconceptions that persistently surround oil shale. This NOSA publication was carefully prepared and edited by experienced oil shale veterans, each 

with years of experience in trying to get an oil industry started in the United 

States. 

There are a few key points that I would like to focus on today: 

• The US has the nearly 70% of the world’s oil shale resources and the deposits 

in the western US contain more oil than the world’s proven oil supplies. 

• Developing oil shale in the western US would create tens of thousands of high 

paying jobs, reduce the nation’s dependency on foreign oil, improve the balance of trade, enhance national security, provide a stimulus to the economy, 

and generate tax revenues for all levels of government. 

• There are already a number of proven and unproven technologies to produce 

shale oil and production is occurring now in other nations, such as Estonia, 

Brazil and China. 

• We believe that shale oil can be produced in the US, safely and in an environmental responsible manner. Industry and research organizations will figure 

out the best technologies, if the incentives exist to do so and if the roadblocks 

can be reduced. 

• However, the federal government, through the BLM, controls nearly 80% of 

the oil shale lands and there is currently no oil shale leasing program, despite 

the fact that leasing was provided for under the Mineral Leasing Act of 1920. 

As a nation, we have made a number of efforts to develop oil shale and there 

have been many successful research programs completed over the past 90 

years. However, we seem to lack the national resolve to keep a sustained oil 

shale program moving forward. The most recent unconventional fuels legislation was the Energy Security Act of 2005 that laid out a program and mandated certain research and leasing activities. While that program got off to 

a great start, it too appears to be floundering, despite the fact that the actions 

required therein are very explicit. 

• NOSA believes that the BLM should make lands available for lease. Sufficient 

regulations and environmental laws already exist. Industry should be allowed 

to select the best technologies, realizing that industry takes the investment 

risks. It should be up to industry to conduct the research and develop the best 

technologies, realizing that the technologies will evolve with time and experience. 

• Just because the BLM leases an oil shale property, there is no assurance that 

the project will develop. Industry must still design the project, secure permits, 

59 

comply with NEPA, secure water and other services, arrange financing, etc. 

The burden falls on industry. BLM must simply make the land available. • If it is the nation’s interest to develop oil shale, and we believe it is, then 

the government should make the land available, expedite the permitting process, and then let industry make it happen, while working with the numerous 

stakeholders in the local region. • Industry needs a clear, consistent federal program and a national commitment to develop oil shale. Access to lands and regulatory certainty are crucial 

to companies starting a new, capital intensive industry. 

Thank you for the opportunity to appear here today. NOSA feels this hearing is 

very timely and we thank you for your vision and your willingness to address the 

issues impeding the development of ‘‘Oil Shale, America’s Untapped Energy Source’’. 

National Oil Shale Association 

P.O. Box 3080 

Glenwood Springs, CO 81602 

Phone 970–389–0879 

Website: www.oilshaleassoc.org 

Mr. LAMBORN. OK. Thank you, Mr. Aho. 

Mr. McCloud? 

STATEMENT OF BRAD McCLOUD, EXECUTIVE DIRECTOR, 

ENVIRONMENTALLY CONSCIOUS CONSUMERS FOR OIL SHALE 

Mr. MCCLOUD. Good morning. As stated, my name is Brad 

McCloud. I am the Executive Director for ECCOS, or otherwise 

known as Environmentally Conscious Consumers for Oil Shale. 

First, on behalf of myself and ECCOS, thank you to both Representatives Tipton and Lamborn for conducting these hearings 

and keeping the lines of communication open on an issue that we 

feel will impact the future security and economic prosperity for the 

United States. 

The ECCOS is a grassroots, nonprofit group. We have members 

in Colorado and Utah, and we have plans to expand into Wyoming. 

We are one voice for consumers—consumers of groceries, consumers of cars, consumers of fishing and hunting and camping 

equipment, and consumers of homes. We are taxpayers, and we are 

voters. 

We are not technical experts on oil shale. You have a roomful of 

many representatives today from the industry who can discuss in 

depth the ongoing development and research projects that are 

going on. Our mission is to educate the public and elected officials 

about oil shale energy and issues to promote the development of oil 

shale in order to decrease our Nation’s dependency on foreign fossil 

fuels. We also feel that a strong energy policy—clear, consistent, 

and environmentally responsible—is necessary for both energy security and to maintain and grow good-paying jobs here in the 

United States. 

The development of oil shale and other domestic energy fuel 

sources will lead to energy independence for the United States, but 

the current policy of regulatory uncertainty in the United States 

will systematically dismantle the progress being made by the oil 

shale industry in recent years and further delay or halt the 

projects in the future. 

The Energy Policy Act of 2005 that has been referred to often 

today was a clear policy with clear direction and indicated the importance of oil shale development. The process was comprehensive. 

It was open, and it was rigorous. It achieved the resource developVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6602 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
60 

ment goals of the Energy Policy Act of 2005 and, along with followup amendments in 2008, protected the environment and recreational uses of those public lands. 

However, in December of 2007, then-Senator Ken Salazar inserted a moratorium on enacting rules for oil shale development on 

Federal lands in an omnibus spending bill. Come forward to 2011, 

not quite 3 years after the initial PEIS was finished in 2008, under 

a new administration and now Secretary of the Interior Ken Salazar, the BLM issued another notice to prepare a new PEIS. The 

only thing that changed roughly in about that 3 years is that technology in the oil shale industry had improved. 

Initiating a new PEIS on the same topic was not only a redundant waste of time and resources, but it caused concern and instability for an industry by once again arbitrarily changing the rules 

of the game. 

Currently, the unemployment rate in Grand Junction is around 

10.5 percent. Up valley, you can go to Garfield County, it is about 

10.7 percent. Colorado overall is about 9.2 percent. And if we go 

just east—we will go to Utah—it is about 7.5 percent. Nationally, 

I probably don’t have to tell you that we are shockingly high. It is 

still around 9.1 percent for unemployment. 

Recently, very recently, actually, an independent business information service called Visiongain released a report—and I can give 

you more information on it if you like. But the report calculates 

what it calls the global oil shale market. It does this by estimating 

spending on upgrading existing oil shale facilities, new infrastructure, and spending on R&D. 

The report calculates that the value on that global oil shale mar- ket to be worth just over $2.8 billion alone in 2011. Now it seems 

that it would make—it seems that finding a way to capitalize on 

just a portion of those billions of dollars in the Visiongain report 

that they mention could go a long ways into lowering unemployment rates, improving our roads and our schools and our national 

and local economies. 

If the United States wants companies to invest in oil shale research and development, as it claims, then companies must be provided a path to commercialization. The U.S. is sitting on a massive 

oil reserve. We are a stable nation with excellent safety and environmentally protective laws. 

The world would be well served by having a stable supply of oil 

from the United States, and our local and national economies 

would benefit immensely. America can be the world’s leader in oil 

shale, but industry will not continue to invest in environmentally 

responsible technologies without consistent regulation and stable 

oversight from the Federal Government. 

ECCOS feels it necessary to point out inconsistencies in the policies of the Federal Government between administrations and the 

very political nature of these exercises that over the years have discouraged the development of oil shale production and potential 

energy independence for the United States. 

To help stabilize gasoline prices, create good-paying jobs, and 

make the U.S. less reliant on foreign governments for our energy 

needs, the U.S. must maintain an environment of regulatory consistency. Policy cannot be allowed to be arbitrarily changed every 

61 

3 to 4 years. If the U.S. can implement such a policy, we ensure 

a brighter future for our energy security, our national economy, 

and our local economies. 

And once again, I respectfully thank you for your time today. 

[The prepared statement of Mr. McCloud follows:] 

Statement of Brad McCloud, Executive Director, 

Environmentally Conscious Consumers for Oil Shale (E.C.C.O.S.) 

On behalf of Environmentally Conscious Consumers for Oil Shale (or ECCOS) we 

want to thank Representatives Tipton and Lamborn as well as the Subcommittee 

on Energy and Mineral Resources for conducting this oil shale hearing and keeping 

the lines of communication open on an issue that has potentially prodigious and 

lasting impacts on the future energy security and economic prosperity of the United 

States. 

ECCOS is a grassroots, nonprofit group based in Grand Junction, Colorado. We 

have members in Colorado and Utah. Our mission is to educate the public and elected officials about oil shale and energy issues. We are not an advocacy group. However, we would like to see research into oil shale continue. 

The title of today’s hearing strikes directly at the issue of what is at stake with 

the current policies and attitudes coming from the current administration and the 

U.S. Department of the Interior. A strong energy policy is necessary for both energy 

security and to maintain and grow good paying jobs in the United States. 

Many believe development of oil shale and other domestic energy fuel sources 

could very well lead to energy independence for the United States, but the current 

policy of regulatory uncertainty in the U.S. will systematically dismantle the 

progress made by the oil shale industry in recent years and further delay or halt 

projects in the future. 

For a recent example of instability in policies affecting the industry one only 

needs to look at the Energy Policy Act of 2005. It provided a clear policy direction 

that indicated the paramount importance of oil shale development to contribute to 

a viable, realistic path to meet urgent national energy needs and carefully balance 

the economic realities of oil shale development with appropriate environmental and 

socioeconomic safeguards. It, in addition to the 2008 Oil Shale Rule and 2008 RMP 

(‘‘Approved Resources Management Plan Amendments/Record of Decision for Oil 

Shale and Tar Sands Resources to Address Land Use Allocations in CO, UT and 

WY’’) Amendments established legal parameters for oil shale leasing in northwestern CO, southwestern WY, and northeastern UT. The administrative process 

was comprehensive, open, and rigorous. Most importantly, it achieved the resource 

development goals of the Energy Policy Act of 2005 and protected the environment 

and recreational uses of public lands. 

A good example of this instability came in December of 2007 when then Senator 

Ken Salazar inserted a moratorium on enacting rules for oil shale development on 

federal lands into an omnibus spending bill, then pushed in May of 2008 to extend 

the moratorium for another year and then less than three years after the initial 

PEIS was completed in 2008 (April of 2011) the BLM, under a new administration 

and now Secretary of the Interior Ken Salazar, issued a ‘‘Notice of Intent to Prepare 

a Programmatic Environmental Impact Statement (PEIS).’’ Why? The redundancy 

of initiating a new PEIS on the same topic that was addressed three years ago is 

not only waste of time and resources, but it also causes concern and instability for 

an industry by once again arbitrarily changing the rules. If a project is forced to 

start and stop over and over, and is given no indication as to when clear policies 

will be provided and maintained, a company starts to wonder if it will ever see the 

light at the end of the tunnel. When issuing its notice of intent the BLM stated as 

its rationale ‘‘. . .there are not economically viable ways yet known to extract and 

process oil shale for commercial purposes...’’ 

We feel that in many ways due to the redundancy of this process the BLM’s rationale is a self-fulfilling prophecy. How can we expect companies to invest in oil 

shale research and development when the federal government creates uncertainty 

and stands in the way? 

The only thing that has changed in the past three years is oil shale technologies 

have improved. There are several nations around the world that are aggressively 

pursuing oil shale development. We are in the midst of another energy crisis with 

gasoline prices approaching $4 per gallon. The unemployment rate in Grand Junction, Colorado and the United States is still staggeringly high, and there is even 

more unrest in the Middle East 

62 

The largest and richest reserves of recoverable oil shale (estimated at more than 

five times the amount of oil located in Saudi Arabia) are found in Colorado, Utah 

and Wyoming. If the United States wants companies to invest in oil shale research 

and development, as the current administration and those before it have claimed, 

then these companies must be provided a path to commercialization. Why would a 

company invest hundreds of millions of dollars into research, if they have no clear 

path to recouping that investment? 

Companies like Shell, Chevron, American Shale Oil and Red Leaf Resources are 

continuing to develop exciting and new technologies that someday may lead to commercial viability and meet growing national and international energy needs. However, regulatory uncertainty has slowed research and development projects of oil 

shale dramatically and forced most investment dollars and the good paying jobs associated with those projects flowing in the direction of more development-friendly 

nations. 

The fact is the U.S. will be reliant on oil for decades to come. Even with the aggressive deployment of hybrid, electric vehicle, natural gas, and biofuels technologies, the U.S. Energy Information Administration reported that by 2035 93% of 

vehicles in the U.S. will still run on oil and, world oil consumption will increase 

30%. Our dependence on oil and non-renewable resources is going to remain an 

issue for generations. 

The U.S. is sitting on a massive reserve of oil. We are a stable nation with excellent safety and environmental protection laws and a strong recognition of private 

property rights. The World would be well-served by having a stable supply of oil 

from the United States. And, our local and national economies stand to benefit immensely. 

America can be a world leader in oil shale technology, but the private sector will 

not continue to invest in environmentally responsible oil shale technologies without 

consistent regulations and stable oversight from the federal government. This new 

PEIS process is just one example of how even more uncertainty is added into the 

equation for those companies trying to find an answer to our domestic energy needs. 

In closing, I would like to reiterate ECCOS is not an advocacy group. However, 

we feel it necessary to point out inconsistencies in the policies of the federal government between administrations and the very political nature of these exercises that 

over the years has discouraged the development of oil shale production and the potential energy independence of the United States. If you truly want to help stabilize 

gasoline prices, create good paying jobs, and make the U.S. less reliant on unstable 

foreign governments for our energy as has been stated by administration after administration then the U.S. must maintain a consistent regulatory policy. Policy cannot be allowed to arbitrarily change every three to four years. If the U.S. can implement such a policy we can secure a brighter future for our energy security, our national economy, and our communities. 

Mr. LAMBORN. All right. Thank you. 

And Commissioner Spehar? 

STATEMENT OF JIM SPEHAR, FORMER MAYOR OF GRAND 

JUNCTION, COLORADO, FORMER MESA COUNTY COMMISSIONER 

Mr. SPEHAR. Thank you, Mr. Chairman. 

I appreciate the opportunity to testify today before the Subcommittee and to submit the more formal written testimony with 

more detail for the record, which I have also done. 

I was pleased, Mr. Chairman, to hear your emphasis on balance 

as we began this hearing and to hear Representative Tipton talk 

about creating win-win situations. My purpose here today is to talk 

a little bit about that from the standpoint of a former elected official and as a former member of the Colorado Economic Development Commission. 

Six generations ago, my family came to western Colorado, to 

Crested Butte, to work on the extraction industries, mining coal 

and precious metals. Three times this month, my wife and I have 

63 

traveled there, encountering various roadblocks on Highway 15 on 

Kebler Pass. 

While those delays frustrated me, my much more patient wife explained to me that there is sometimes a positive purpose to roadblocks. They warn of potential danger, the need for special attention and caution, and they provide information to successfully navigate a change for a changing situation. And they protect us and 

others, including those working to make the changes. 

The same could be true of the roadblocks some complain about 

regarding oil shale. I am reminded of the well-known saying that 

the four most expensive words in the English language are, ‘‘This 

time it’s different.’’ 

From my experience working in and observing this latest development cycle, I know this is not the industry of 30 years ago. Many 

different technologies are being researched this time. The pace and 

timing is more cautious and deliberate. 

But some lessons from the time between disproven expectations 

and the devastation that followed last time do apply, and I wonder 

if we have learned them. Where is the necessary preparation to 

host this industry if it does emerge? Do we prudently plan, identify 

impacts and how to handle them, or struggle and suffer as northwest Colorado did three decades ago, a time, when, according to 

then-Governor Dick Lamm, it was like trying to change a tire on 

a car that was moving. 

There is no need to risk making northwest Colorado and neighboring oil shale areas a national sacrifice zone once again. There 

is still time to be strategic without compromising development of 

an oil shale industry. We have been chasing this rock that burns, 

this fuel of the future for more than a century now, 10 years at a 

time. 

It was 10 years when I began consulting with Shell in 1997. It 

was 10 years when that work ended for me in 2003, and it was still 

10 years when I heard a presentation at the Mahogany test site 

last fall. In presentations, hearings, and symposiums in Utah and 

Colorado over the past few months, I still heard industry representatives estimate it will be 7 to 12 years before a commercialscale oil shale industry might develop. 

That means there is time for the comprehensive impact studies 

that are as important as the science projects underway at research, 

development, and demonstration sites. These studies are vital if development is to be, as Shell and others have repeatedly promised, 

economically viable, environmentally responsible, and socially sustainable. 

Decades of creating nurturing and diversified economies need to 

be honored and supported. Taxpayers and their communities are 

just as deserving of certainty as the industry is. Whether we support or oppose oil shale development, it is irresponsible not to be 

planning now for that potential development and its impacts. To do 

that, we need comprehensive planning and preparation. However, 

the BLM’s own 2008 programmatic environmental impact statement confirmed the lack of adequate current information to do 

that. 

We need the resources to manage upfront impacts and help provide a soft landing if, once again, things don’t pan out. But there 

64 

has been no discussion of creating an oil shale trust fund, which 

did both last time. 

We need to assure current taxpayers they are not expected to increase their burden to finance the needs of the industry. But instead, we see proposed reduced royalty rates that would deprive 

communities of funding. As you know, just under half of those royalties flow back to State and local governments. I suspect Congress 

will not be anxious to defer its 51 percent and let all of the communities remain whole. 

We need to assure a reasonable return to taxpayers on the use 

of Federal lands but, instead, propose commercial leasing before 

technical research proves the need and the market helps establish 

an appropriate lease rate. We need to protect and provide for current sustainable economic drivers, such as agriculture, hunting and 

fishing, tourism and recreation, each with multimillion dollar positive current impacts and thousands of existing jobs. 

We need to all have realistic expectations for a potential industry, which, in my experience, is just as anxious to manage exuberant promises as anyone. 

In 2000, while I was on the city council, Grand Junction and 

other local partners funded an effort to define our future. That was 

known as Vision 2020. Among other things, 1,200 face-to-face interviews were conducted here in Mesa County. Nearly 20 years after 

the fact, ‘‘black Sunday’’ was still seen as the defining moment in 

this community’s history. 

We need to cooperate in developing a ‘‘no regrets’’ strategy if the 

oil shale industry is to be successful this time, gather the full range 

of necessary information, and provide financial and other resources 

to implement prudent planning, all that if we are to make certain 

we have learned the lessons of that painful past. We should consider that an opportunity and a challenge, not a roadblock. 

Thank you for the opportunity to talk about the needs of our 

communities, and I look forward to answering any questions you 

may have. 

[The prepared statement of Mr. Spehar follows:] 

Statement of The Honorable James G. Spehar, Former Mayor, Grand 

Junction, Colorado, Past President, Colorado Municipal League 

This written submission and my oral comments before the U.S. House of Representatives Subcommittee on Energy and Mineral Resources at its field hearing on 

‘‘American Jobs and Energy Security: Domestic Oil Shale the status of Research, 

Regulation and Roadblocks’’ in Grand Junction, on August 24, 2011, are informed 

by several perspectives. 

They include coming from a six-generation western Colorado family that originally 

emigrated to the Western Slope to work in extraction industries; former responsibilities as an elected Mesa County Commissioner and as a city council member and 

Mayor of Grand Junction; work with other communities as a past president of the 

Colorado Municipal League and former board member of Associated Governments 

of NW Colorado; work within state government on growth and development issues 

and as a former member of the Colorado Economic Development Commission; and 

helping direct local economic development efforts as a past board member of the 

Mesa County Economic Development Commission (now the Grand Junction Economic Partnership). 

It also results from 15 years of consulting work on growth, energy and economic 

development, and job creation issues w/local governments, their regional associations, state agencies, multi-national energy companies and others. That includes six 

years of contract work on oil shale and community issues for one of the early lessees 

in the federal government’s oil shale research, demonstration and development proVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00068 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
65 

gram. I have worked with the Colorado Department of Labor and Employment on 

workforce issues in rural Colorado and helped directed a collaborative multi-county 

effort on regional socio-economic issues that included portions of NW Colorado that 

will be directly impacted should a commercial oil shale industry develop. 

Given that background, I applaud the efforts of Congress and the subcommittee 

to investigate the role an emerging oil shale industry might play in job creation and 

providing the ‘‘home grown’’ energy resources to fuel employment growth and to 

help move our nation toward energy self-sufficiency. The purpose of my oral and 

written testimony is to make certain other important parts of that equation are 

given equal consideration as we move forward. 

Whether you oppose or support oil shale development, it’s irresponsible not to be 

planning now for potential development and the possible impacts. 

That examination of impacts demands more than just a science project. But current research is focused primarily on technology, not the broad range of social, economic, environmental and other community impacts that will result if the technical 

research is ultimately successful. 

Just as the industry desires certainty in what’s required of it, so do communities 

deserve that same degree of certainty as to what the expectations of will be of their 

local governments, non profits and other agencies, schools, hospitals, for infrastructure and services associated with the development of this industry. 

Similarly, this added use on public and private lands, its water and power requirements and potential impacts to air quality, will impact many existing multimillion dollar industries that also provide important jobs, including but not limited 

to agriculture and other water users, tourism and outdoor recreation, even natural 

gas and other existing extractive industries. We should be careful that we are not 

merely swapping jobs and that new employment does not come at the expense of 

existing job providers in already active and sustaining industries important to the 

economic well-being of the region. 

The BLM’s own 2008 Programmatic Environmental Impact Statement (PEIS) acknowledges the lack of then-current information available regarding many of these 

issues. Subsequent analysis has served both to inform and confuse matters identified as uncertainties in the PEIS and the current review and potential update of 

that document ordered by Interior Secretary Ken Salazar will hopefully fill in some 

of the blanks. 

For several years now, I’ve been part of an informal NW Colorado group of current and former local elected officials, wildlife and agriculture interests, water organizations and others who’ve been working with our congressional delegation since 

the summer of 2009 to see that these sorts of impacts are quantified and addressed 

prior to any commercial leasing. We most recently met with Representative Tipton 

in February of this year and hope to continue these discussions with him, with Senator Mark Udall and with Senator Michael Bennet. 

The Colorado delegation, on our behalf, has twice forwarded to the DOI our request that an independent study of cumulative impacts of oil shale development be 

completed prior to any commercial leasing. (See Attachment A). 

A written reply to Sen. Mark Udall dated March 24, 2011, sent on behalf of BLM 

Director Bob Abbey, indicates that sort of investigation will be part of the PEIS review now in progress and is a welcome next step in the process of prudently planning for the possibility of an oil shale industry. (See Attachment B). 

The Associated Governments of NW Colorado, a regional association of municipal 

and county governments in the region, a few years ago commissioned a cumulative 

impacts study of development and population growth in the same geographic area 

that is ground zero for this potential industry. (See Attachment C.) 

That study, entitled ‘‘Northwest Colorado Socio-Economic Analysis and Forecasts 

’’ and released in 2008, likely already needs updating but provides an excellent outline of the sort of information local communities need in order to plan intelligently 

if they are to host commercial oil shale development, whether a decade or more from 

now or in some shorter time frame. 

There is still time to answer the important outstanding questions regarding how 

local communities expected to host oil shale development can manage associated impacts. As outlined in the attached report ‘‘Secure Fuels from Domestic Resources: 

The Continuing Evolution of America’s Oil Shale and Tar Sands Industries’’ prepared by INTEK, Inc., for the U.S. Department of Energy Office of Petroleum Reserves and released in September, 2010, all of the players active in oil shale development envision multi-year research and development scenarios. In recent months 

and in various settings, major players in this region have estimated time frames of 

7–12 years for development of commercial-scale technologies. (See Attachment D). 

If that time frame is shorter, or if some sort of new crisis in the Middle East or 

elsewhere accelerates the schedule, it’s even more imperative that this sort of addiVerDate Nov 24 2008 09:46 Aug 15, 2012 Jkt 000000 PO 00000 Frm 00069 Fmt 6633 Sfmt 6621 L:\DOCS\68237.TXT Hresour1 PsN: KATHY
66 

tional information over and above the ‘‘science project’’ technology be made available 

and appropriate steps to mitigate impacts be put in place before commercial leasing 

and development take place. 

Here are some of the questions that need to be answered in the context of the 

subject matter of this hearing: 

(1) Should development of an oil shale industry be subsidized either directly, 

via government funding or product purchases, as has been done in previous 

cycles, or indirectly, via reduced royalty rates as anticipated in the Energy 

Policy Act of 2005? 

(2) Should large-scale leasing of federal lands for commercial oil shale production proceed, as anticipated in the Energy Policy Act of 2005, prior to successful demonstration of commercial-scale processes for production of fuel 

from oil shale? 

(3) How can the federal, state and local governments, the industry, and other 

partners make certain impacts of oil shale development do not fall unreasonably on current taxpayers and not negatively impact important sustaining industries? 

(4) What role does the federal government play in maintaining realistic expectations of companies involved in oil shale research and development and in 

creating realistic expectations on the part of a public justifiably anxious 

about U.S. energy security and concerned about job creation.? 

It is important to remember the lessons of the past, when understandable haste 

and federal subsidies fostered the oil shale boom of the late 1970s-early 1980s. 

Thousands of workers followed that boom to northwestern Colorado, overwhelming 

infrastructure, taxing services, and artificially inflated the economy. Just a few 

years later came the infamous ‘‘Black Sunday’’ when thousands lost their jobs, communities became ghost towns, and a decade or more of struggle began to regain economic balance. 

Helpful in dealing with that previous boom and bust was the Oil Shale Trust 

Fund, designed to assist industry in helping communities front the up-front impact 

costs that come prior to receipt of tax revenues. That fund, filled by advance payments against future royalties, also helped provide a somewhat softer landing after 

the bust, maintaining payments on infrastructure built in anticipation of a longterm industry and funding economic development aimed at diversifying jobs and industry in the region. 

There’s been no talk of such a trust fund as we again look at what Rep. Tipton 

cites as the potential for 350,000 new jobs in a new oil shale industry. 

Equally concerning is the provision in the Energy Policy Act of 2005 cutting initial 

oil shale royalty rates by more than half. As subcommittee members know, slightly 

less than half of royalty payments are returned to states and local governments 

where the activity occurs. Reducing those rates diminishes the ability of local communities to provide infrastructure and services a new industry finds necessary to 

create and sustain jobs. 

Congress needs to understand that direct correlation and become an active partner with the states and their local governments in dealing with impacts should a 

new oil shale industry come to fruition. 

Now we are hearing calls for large-scale commercial leasing as another incentive 

for kick-starting the industry. Two mayors of the region’s largest cities raised important questions regarding that issue just a few days ago on the op ed page of the 

Grand Junction Daily Sentinel. ‘‘If there is no proven commercial process, wouldn’t 

this foster speculation,’’ they asked. ‘‘Should research be successful, won’t it then be 

easier to make certain lease rates reflect the appropriate value to the public?’’ 

Equally concerning is the lack of comprehensive analysis of the impact of this potential new industry on existing jobs and industry. Air quality, water demands, land 

use changes have the potential to, as the BLM states in the operative PEIS for oil 

shale research and development, to cause the region to morph from its traditional 

agricultural, tourism, hunting and fishing and recreation economies, all of which 

provide important sustaining jobs, to an industrial zone. 

As an example, water issues alone raise enough issues to demand a thorough examination before rushing development of an oil shale industry. Estimates of potential water demands vary by a factor of three, from 120,000 acre-feet per year to 

nearly 380,000 acre-feet. Even if industry utilizes water it already owns, exercising 

those senior rights could have a dramatic effect on junior users in other industries. 

If additional water is necessary, it comes from a Colorado River Basin some say 

is already at maximum capacity. Others who count on some unallocated water in 

the river say that, even at the lowest estimated demand for oil shale, that would 

take up half of Colorado’s allocation of the water remaining in the Colorado River. 

67 

No one likes to consider these sorts of things as a ‘‘worst case’’ scenario when we 

are all in favor of good jobs, energy independence and a more promising future. 

Seeking definitive answers to these important questions should not been seen as 

a roadblock to oil shale development but instead as necessary strategic planning to 

insure a viable and sustainable future. 

But prudence would seem to dictate we develop a ‘‘no regrets’’ strategy that, as 

much as humanly possible, avoids the well-documented mistakes of the past, and 

assures local communities are prepared and adequately funded to deal with associated impacts of oil shale development. 

In conclusion, I would urge this subcommittee to expand its agenda to also include 

examination of the steps necessary to make certain the entire range of questions 

concerning development of a successful oil shale industry that might contribute to 

both job creation and energy independence. Only in that manner can we all be assured that oil shale will be a welcome and meaningful component our energy security and create new jobs without compromising existing economic drivers and our 

treasured way of life in northwest Colorado, northeast Utah and southeast Wyoming. 

[NOTE: Letters submitted for the record by Mr. Spehar follow:] 

68 

[A letter to Secretary of the Interior Ken Salazar dated 

November 18, 2009, follows:] 


68237.003.eps
69 


68237.004.eps
70 

[A letter to Secretary of the Interior Ken Salazar dated 

December 17, 2010, follows:] 


68237.005.eps
71 


68237.006.eps
72 

[A letter to Senator Mark Udall dated March 24, 2011, follows:] 


68237.007.eps
73 

Mr. LAMBORN. Well, thank you all for being here. You have provided various kinds of illumination and education for us, and I appreciate that. We are going to launch into the first round of questions. 

Mr. Whitney, you talked about the PEIS, the preliminary environmental impact statement, and you gave a very diametrically different description of that than Ms. Hankins did earlier this morning. She said there had been all these new things going on that had 

come to light that justified it, whereas you say that—and Mr. Aho, 

you said the same thing—that there has not been anything that 

has changed in 3 years. 

And Mr. McCloud, you may have said that as well—other than 

political changes in Washington. So which is it? I mean, I am confused here. I am mystified. 

Mr. WHITNEY. Well, as I said, we do believe there is no reason 

to revisit the PEIS. Shell believes in a transparent and regulated 

NEPA process, the National Environmental Policy Act process for 

potential commercial projects. 

When a successful RD&D pilot is completed, an application for 

conversion would be submitted that would include a description of 

a commercial project that would be used to work through the 

NEPA process. And that is when specific environmental concerns 

and socially sustainable issues can be addressed. 


68237.008.eps
74 

Shell’s ultimate goal is to create a commercial oil shale recovery 

operation that is economically viable, environmentally responsible, 

and socially sustainable. The exact scale and timing for development will depend on a number of factors, including regulatory stability. 

The PEIS is just a key element of the regulatory framework that 

oil shale industry needs to move forward. 

Mr. LAMBORN. Yes, and I meant to say programmatic EIS. 

This issue of it is always 10 years out in the future, your company has one of the major demonstration projects, research projects 

going on here, which I have visited in the past. And I have had discussions—I don’t want you to feel compelled to give anything that 

is proprietary to your company. But cost effectiveness is obviously 

a big issue. 

And with the rising and then lowering and then rising price of 

oil, an expensive technology because it is more complicated, more 

time intensive and everything else, at some cycles in the oil prices 

will not be profitable. At other times in the cycle, it will be profitable. 

Is this a technology that is always going to be 10 years away and 

never, ever materialize? I have heard that many times today and 

in the past. Or will we reach a point at some point with oil around 

the world becoming harder to access, more expensive to produce because we are going into deeper waters or troubled areas politically, 

or other things like that? What does your company think about the 

ultimate viability of oil shale oil production? 

Mr. WHITNEY. Shell supports the RD&D program. In general, if 

a regulatory environment exists that awards numerous companies 

leases and a framework exists where a stable, long-term regulatory 

environment is well understood, then industry has the best chance 

of truly assessing how economically viable, environmentally responsible, and socially sustainable it can create—the projects that they 

can create. 

So, there is no definitive answer. The framework just needs to 

exist for industry to put its shoulder against it and see if we can 

solve the problem and make oil shale a robust business for the future. 

Mr. LAMBORN. So you are convinced that at some point, the 

break-even point will be reached and exceeded to make this an ongoing proposition? 

Mr. WHITNEY. Yes, sir. 

Mr. LAMBORN. I will just state for the record, I, for one, would 

rather have a private company making this investment, as opposed 

to taxpayers being on the hook. As long as the environment is 

being protected, I would rather see private corporate dollars being 

invested, and you and I, as taxpayers, don’t have to make that investment, as has been the approach in the past. 

That is my time for now. Representative Tipton? 

Mr. TIPTON. Thank you, Congressman Lamborn. 

Listening to some of the testimony, and Commissioner Spehar 

and I have probably some of the longer history on this side of the 

West Slope, it is kind of like ‘‘Groundhog Day,’’ that old movie? 

[Laughter.] 

75 

Mr. TIPTON. You know, it is the same thing being played over 

and over again many times. When we are talking about it is always 

10 years out, I recall back with the development under President 

Carter, the Department of Energy, a lot of our moves to move, to 

the best of our ability, to energy self-sufficiency in this country, it 

was always 10 years out. 

I would just like to have you maybe perhaps comment. Has part 

of that been political failure out of Washington, D.C., in particular, 

to be able to have that political will, to be able to actually achieve 

the goal? And if you would just maybe comment on that, I would 

appreciate it. 

You are up first, Mr. Whitney. 

Mr. WHITNEY. All right. Like I said, Shell supports the RD&D 

program. The way that that program works, of course, is, like I 

said, based on a successful pilot, an application for a conversion is 

submitted that describes the commercial project that would be 

moved forward through the NEPA process. 

So, indeed, the process will work. We just need to give it time 

and make sure that the business environment and regulatory environment allows things to move forward in a systematic, clear way. 

The more companies are awarded leases, the more companies are 

progressing their research and development, the more likely we are 

to be successful in finding a commercial path forward for oil shale. 

Mr. TIPTON. Anyone else care to comment on that? 

Mr. AHO. Well, you know, the idea that shale is always 10 years 

away, some of that is driven by low supply and demand for oil. And 

obviously, as the world population grows and the increased demand 

is now on the world scene and our oil supplies are gradually decreasing, we are reaching a point where our supply will not be able 

to meet demand, and we will see increased pricing of oil. Of course, 

we are seeing that today. 

So it comes to a point where there is a break-even point for the 

production of shale oil where it does become economic. And some 

of the companies are talking $50-$70 range. From the country of 

Estonia that just moved into Utah, they look at their break-even, 

including their return on investment, is at $70 a barrel. 

So they are making great strides to begin that project in Utah 

with the idea that they have a technology that works in Estonia. 

They intend to bring that to the United States and look at commercial development on that project. 

So, I think we are reaching the point where on the world scene, 

we don’t expect the price of oil to drop much below—certainly not 

below $70 a barrel. Some people think it could go back there for 

short periods of time. 

But the lead time involved in these projects is crucial for people 

to understand. Even the project that we are working on in Utah, 

that project which is aligning conventional surface retorting, they 

are looking at 4 to 6 years of permitting and environmental work 

in advance of construction. And their question becomes the uncertainty of the Federal regulations. 

We are all stuck with this. What are the rules going to be 5 or 

6 years from now? We don’t know because they are not what they 

were 5 years ago, and they are not what they were 30 years ago 

76 

when I started in this business. This uncertainty is what is driving 

us crazy. 

Also, and we have talked about today all these Federal programs 

that need to get lined up. But frankly, when a corporation gets a 

lease, and they begin the permitting process, we always have to 

put together a detailed development plan and go through a detailed 

permitting process that will address water supply. Corporations are 

not going to invest millions of dollars without an assured water 

supply. 

They are not going to get into a project where they haven’t dealt 

with all of the local stakeholders in order to get the permits. There 

is a whole process that corporations have to go through. So just assigning somebody a lease doesn’t give them the green light to build 

a plant. 

Thank you. 

Mr. SPEHAR. Representative Tipton, I agree with you. I think 

none of us could say over decades that we have had a consistent 

energy policy, and certainly, that is, I think, part of the problem. 

But I think it is also true that I expect this industry will be developed. That is why I am concerned about a head start on dealing 

with impacts and so on. 

As it has been explained to me in my work over the years, particularly the major energy companies know that new supplies of 

conventional oil are harder to find and more expensive to develop 

and produce. That is why they are investing admirably in alternative technologies, and one of them even helped do the energy 

conservation in the government buildings on this block. 

But I think there will need to be a bridge between the new technologies and conventional resources and that these what are called 

unconventional fuels, like tar sands and oil shale, are one opportunity to provide that bridge. 

I worry, though, because even at a mid-range scale, at a 500,000- 

barrel-a-day industry, the study done by Associated Governments 

of Northwest Colorado that I refer to in and attached to my written 

testimony, anticipates population growth in excess of normal population growth of about 50,000 in just the three counties in northwest Colorado. That is a huge bite for these communities to take 

on. 

Current taxpayers shouldn’t have to do the upfront development 

or upfront impacts for that. As you know, from your experience in 

our State Legislature, our tax structure here delays gratification. 

You know, if Gary builds a plant today, it may be reassessed next 

year. You may get the bill the following year, and the money may 

be collected the year after that. All that time he is building that 

plant is when most of the impacts occur. 

So, that is why I suggest that we revisit the idea of the oil shale 

trust fund, where these companies would pay royalties in advance 

against future billing and provide that upfront scenario where 

money is available for communities to deal with these impacts. 

Mr. TIPTON. I appreciate your comments on that. 

And Mr. Whitney, can you give us an idea, and we are going 

back to 10 years down the road, 10 years down the road, has your 

business at Shell taken a look and said have we had a consistent 

regulatory policy? This is where we could have been? 

77 

Are there any sorts of those types of estimates, or do you feel like 

you get to wake up in a whole new world every morning when it 

comes to regulatory policy and then try and move the ball forward 

from there? 

Mr. WHITNEY. In general, we just try to communicate clearly that 

a stable, long-term view and stable regulatory policy is very important for industry. And indeed, change does happen, and we always 

are forced to deal with that. 

But when we see change on the horizon, that is when we really 

want to communicate more clearly and make sure that people really understand that the things that they are considering, are they 

addressing them in the right way? Is the PEIS the right way to 

deal with it, or is it the NEPA process? 

What is the best way to address the concern, and how do you get 

it done in the appropriate regulatory environment? 

Mr. TIPTON. I think that certainly goes to Mr. McCloud’s comments in terms of companies must be provided with the path to 

commercialization. I think that was your comment. 

Mr. MCCLOUD. Exactly. Actually, if I can, Representative Tipton? 

One of the things that the BLM stated when they reissued the 

PEIS and one of the rationale was that there was not an economically viable way yet known to extract and process oil shale for commercial purposes. 

By continually moving the parameters or not offering set, clear 

guidelines and policies, that is rather a self-fulfilling prophecy. 

Being a businessman, and people involved in business know that 

you have certain things you have to consider when you are putting 

together your business model and your business plan. 

You have to look at what your return on investment is, how is 

it potentially profitable, the different environmental, social, and 

economic considerations. Is it sustainable? And those are just a few 

of the things that you have to consider when you are putting those 

policies together. But if you can’t maintain a stable regulatory environment to do that within, you can’t build a business model that 

you are going to have for future needs down the road as well. 

The biggest thing we have to consider if it is going to be economically feasible, if you look at the U.S. Energy Information Administration, they reported that by 2035, even with aggressive use of hybrid, electric, hydrocarbons, natural gas, 93 percent of the vehicles 

in the United States are still going to run on oil. 

So, by that same year, 2035, they estimate that the consumption, 

the world’s oil consumption will be up by 30 percent. The thing is 

on supply and demand, at least now oil shale works to be a bridge 

fuel in that middle. 

Mr. TIPTON. May I ask one more? I kind of ran through both my 

series of questions. 

Mr. LAMBORN. OK. Sure. Go ahead. 

Mr. TIPTON. But I would like to return back to the comment I 

was making to Ms. Mittal in the previous panel in regards to a 

static versus a dynamic model in terms of looking forward. I believe it is the Moore’s principle, you know, we apply that to technology in terms of it reducing costs. 

It has been my experience in my business that we are able to at 

least create efficiencies. Would that be unexpected once we get this 

78 

development process going, that we are going to be able to create 

efficiencies? 

If we are looking at the $70 barrel model, the Estonian model, 

that actually with American inventions, American creativity, and 

entrepreneurship, that we can probably anticipate that we would 

actually see those production costs lower, reducing, and a more affordable product for American consumers? 

Mr. WHITNEY. Yes, sir. We call that a learning curve. If we look 

back at history—I will just use a couple of examples—it consistently takes around 30 years for new forms of energy to achieve 

about a 1 percent market share. Biofuels is just now reaching 1 

percent, and it is because of the number of companies and the 

number of tries that have been taken to make it a viable fuel on 

the world supply market. 

Wind. Wind took about three decades and may get to the 1 percent mark in the next few years. The very first wind farms, large 

ones, were built in Denmark and here in the United States. But 

it still took that incredible amount of time and investment to go 

down the learning curve to make it a viable alternative source of 

energy. 

Mr. AHO. You are right. I think what we are looking at today, 

we call ‘‘first generation’’ or ‘‘second generation’’ retorting concepts. 

These will all continue to evolve. 

Corporations are in the business to make money. So when they 

look at reducing cost of production, we are doing that day in and 

day out, whether it is the amount of water we use. And our objective is to get water use to a minimal amount because water costs 

us money. 

Anything we are doing in a project of this nature, this is a capital-intensive industry. A shale oil project that will produce 50,000 

barrels per day, we are talking—again, it is the model with mining 

and surface retorting—roughly $4 billion. And on a 50,000-barrelper-day plant, we are looking at roughly 25-to-1 on barrels produced per worker. The question was raised earlier. 

So a 50,000 barrel per day plant would employ roughly 1,900 to 

2,000 permanent employees. Plus then there are the service industries and families and so forth. We are looking at that 2,000 being 

the population of 8,000 in an area. Kind of brings up what Jim was 

talking about earlier that certainly socioeconomic impacts are an 

issue that corporations deal with when they look at permitting one 

of these projects. 

Will there be enough trained workers in that region? How are we 

going to support our employees? How are we going to provide housing? 

So we work together with the local economy and the counties to 

try and mitigate that impact. That is part of the permitting process. Corporations are not going to get permits to build a plant if 

they haven’t dealt with mitigation issues that surround it. 

So, thank you. 

Mr. TIPTON. Thank you. 

Mr. LAMBORN. All right. Thank you, Representative. 

And to conclude now with the last couple of questions, Mr. Whitney, what is your company doing to concentrate on the important 

79 

issue of reducing water consumption and using more recycling 

should the RD&D project be successful and you go forward? 

Mr. WHITNEY. Shell understands how important water is to the 

Western Slope and Western States. Shell is committed to using 

water responsibly. To date, Shell has purchased or appropriated a 

diversity of water rights, in accordance with Colorado law. 

Shell’s overall water management strategy involves three key aspects, all aimed at minimizing the quantity of water used and negatives impacts to other users. So the first one is maintaining a diversity of water rights to provide our operations the flexibility of 

alternative sources and to minimize the impact on existing and traditional users. 

Second, it is optimizing our oil shale recovery and processing 

technologies to reduce the amount of water required. And third, applying best water management practices in our operations, such as 

water treatment, storage, and reuse wherever practical. In a commercial operation, we will have staff dedicated to water management and optimization. 

Mr. LAMBORN. OK. Thank you. 

And Mr. McCloud, we have talked a lot here today about some 

of the concerns such as water and other things that we really have 

to watch closely about. What do you see, on the other hand, are the 

upsides, both locally and nationally, should these projects be successful and they go forward on a commercially viable scale? 

Mr. MCCLOUD. We feel that those benefits become relatively obvious. If we have a potential industry that could create potentially 

100,000 jobs roughly, not only is that good-paying jobs that we 

need here in the United States to help those unemployment rates, 

but we also create a tax base to support our local and Federal and 

regional governments. 

That, in turn, obviously, helping with our infrastructures, our 

schools, community support programs, et cetera. It should be, to 

use a term from earlier, self-fulfilling in the fact that if we can get 

those processes and that industry here, we will be able to create 

the revenues to support the communities like we would like to. 

Mr. LAMBORN. OK. Mr. Spehar? 

Mr. SPEHAR. Well, again, I don’t need to remind you, given your 

Colorado experience, that it is an issue of timing and when those 

revenues become available and if there is adequate funding in the 

early stages while the impacts are the greatest to make sure that 

the burden doesn’t fall on the backs of taxpayers in existing communities. 

And there is a piece of that that we haven’t discussed. I have a 

great deal of faith in a thoughtful and measured research process. 

It will give us the answer, yes or no, and I have no real concern 

about that going forward. 

My concern is this, and maybe we ought to all check our iPhones 

and see where Gaddafi is right now. But if Hugo Cha ́vez wakes up 

on the wrong side of the bed or we have some new crisis in the 

Middle East, and supplies tighten dramatically, and we get back in 

that kind of Jimmy Carter era scenario, all bets are off. 

And unless we have done what I have suggested and, in the process of this research, identified how we are going to deal with impacts, then we are going to be chasing our tail, and we will be back 

80 

in that scenario of 30 years ago, even though this is a different industry and a different technology today. So that, if anything keeps 

me awake, that is it. 

Mr. LAMBORN. All right. Well, thank you all for being here. 

As we wrap up, I want to thank the crowd, for the people gathered here for being so polite and attentive. Maybe the best crowd 

I have ever seen. 

[Laughter.] 

Mr. LAMBORN. Or one of the best. So thank you as well. 

For the witnesses, members of the Committee may have additional questions for the record, and I would ask that you respond 

to these in writing. 

Mr. LAMBORN. I would also ask unanimous consent to submit 

three additional pieces of testimony to today’s hearing record. 

Hearing no objection, so ordered. 

[The additional testimony follows:] 

Statement submitted for the record by Alan Burnham, Ph.D., 

Chief Technology Officer of American Shale Oil (AMSO), LLC 

I am Dr. Alan Burnham, Chief Technology Officer of American Oil Shale Co. 

AMSO, LLC is a joint venture of IDT Corporation and Total, S.A., and holder of 

one of the first-round oil shale research, development and demonstration (RD&D) 

leases awarded by the Bureau of Land Management in 2007. 

On behalf of AMSO, I thank you, Chairman Lamborn, and Congressman Tipton 

for holding this hearing on Domestic Oil Shale Research, Regulations and Roadblocks. It provided a good opportunity to provide an update on the status of oil shale 

RD&D activities. 

In response to your hearing, an anti-oil-shale organization posted quotes from the 

hearing witness compared to predictions about the future viability of an oil shale 

industry with the intent of discrediting the witnesses as telling the same old (and 

incorrect) story. While it is appropriate to ask the question, ‘‘what is different this 

time?’’ This is an important question that deserves a thoughtful answer. The opponents presume that nothing is different. However, that presumption demonstrates 

a lack of understanding of both history and economics. 

Production of shale oil from oil shale is not new. Shale oil was used for street 

lights in Italy in the 1600s. There was a British patent on oil shale retorting in 

1694. Commercial lamp-oil industries started in France and Scotland in the mid 

1800s to compete with whale oil. The Scottish industry lasted more than a century 

and employed up to 5000 miners. The Swedes produced a couple thousand barrels 

per day from surface and in-situ retorting after their fuel was cut off by the Nazis 

until 1966. The largest oil shale industry today is in Estonia, and it is profitable 

at current world oil prices. China also has a significant oil shale industry. 

The reason shale oil is not being produced in the United States today is simple— 

it could not compete in the past with crude oil for any sustained period of time. Over 

the past century, a pending shortage of crude oil was predicted every 25 years or 

so, and interest in oil shale rose. However, oil shale was crushed every time by collapsing crude oil prices. The predicted oil shale boom in the 1920s was killed by 

crude oil discoveries in Texas. The oil shale boom in the 1970s was inspired by a 

high prices caused by a politically contrived oil shortage. That boom was killed in 

the early 1980s when crude oil prices collapsed due to a combination of reduced 

usage, North Sea oil, and Alaskan North Slope oil. OPEC’s market share dropped 

from 50% to 30%, and OPEC’s price-fixing power was neutralized. 

So there are three real questions before us now: (1) are the current high oil prices 

a reflection of true demand pressure on achievable production levels, (2) will the situation get worse over the next couple decades as demand increases in the developing world while conventional crude oil production peaks, and (3) will alternatives 

such as electric vehicles and biofuels be able to beat shale oil on cost? We believe 

the difference in the situation today from the past is real, and oil shale will be economically competitive with the new sources of crude oil and with biofuels in the 

coming decades. 

But what if we and other oil shale investors are wrong and oil shale really is fools 

gold after all? The answer is simple—we will lose our investment. It is not now nor 

ever has been the responsibility of the public to prevent companies from making bad 

81 

investments—it is not a topic worthy of public discussion. The public’s primary responsibility is to be sure that any successful industry would be conducted in an environmentally acceptable manner. Environmental performance standards can be set 

to a large extent without a detailed understanding of oil shale technology, and they 

are basically in place today. It is industry’s responsibility to meet those standards. 

That said, it is desirable to consider all such environmental standards in an intelligent manner that includes the cost-benefit ratio to society, but those tradeoffs are 

broader than the oil shale industry. 

While industry has the responsibility for providing the capital and technical expertise for oil shale development, if it is in fact viable, the Federal government also 

has a unique role as the owner of the most and richest resource. Over human history, economic development has been optimized by producing the best known mineral resources of the day. And by law, the federal government has a responsibility 

to use the oil shale resource for the public good, which includes establishing a reasonable leasing policy. Oil shale leasing will not preclude the simultaneous use of 

the land for other purposes such as grazing and hunting. In fact, the oil shale industry can partner with the government to optimize the habitat for desired vegetation 

and animals. 

Projected costs for in-situ oil shale are competitive other sources of unconventional 

fuels being produced today. The same cannot be said for biofuels, which exist today 

only because of governmental mandates and tax subsidies. If the United States had 

taken a longer term view for oil shale as Canada did for oil sands over the past 

few decades and the United States is doing today for biofuels, oil shale would be 

a commercially viable industry today supplying a significant fraction of our liquid 

fuels. While we cannot change the past, we can still influence the future. 

That concludes our supplemental testimony. Again, we very much appreciate the 

Subcommittee’s visit to Grand Junction last month, and we thank you for the important work you are doing to draw attention to federal oil shale and unconventional 

fuels policy. 

Mr. LAMBORN. And if there is no further business, without objection, the Committee stands adjourned. 

[Whereupon, at 11:26 a.m., the Subcommittee was adjourned.] 

[A list of documents retained in the Committee’s official files 

follows:] • ‘‘Final Report: Northwest Colorado Socioeconomic Analysis and 

Forecasts,’’ BBC Research & Consulting, submitted for the 

record • Hrenko, Rikki Lauren, CEO, Enefit American Oil, Statement 

submitted for the record 

• ‘‘OIL SHALE: America’s Untapped Energy Source’’ prepared by 

the National Oil Shale Association 

• ‘‘Secure Fuels from Domestic Resources: The Continuing 

Evolution of America’s Oil Shale and Tar Sands Industries’’; 

U.S. Department of Energy, June 2007 

Æ