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 Post subject: Oil Shale and Tar Sands Development
PostPosted: Sun Jul 09, 2006 5:03 am 
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Joined: Mon Jan 24, 2005 9:11 am
Posts: 5620
Location: western New York
How the “Deep Ocean Energy Resources Act Of 2006” (H.R. 4761) Would Accelerate Rocky Mountain Drilling

Much of the attention regarding the Deep Ocean Energy Resources Act of 2006 (H.R. 4761), passed by the House of Representatives on June 29, 2006, has focused on the bill’s repeal of the 25-year-old
moratorium on off-shore oil and gas drilling. But the bill also would be a fiscal disaster for the country and have huge ramifications for the Rocky Mountain West, where provisions buried in the bill are intended to dangerously accelerate oil shale and tar sands development and provide industry with a new and unmerited entitlement program to taxpayer funds, and could lead to thousands of
improvidently issued drilling permits.

Provisions of the bill would:

* Create a new federal entitlement program for the oil and gas industry (Sec. 17) by obligating the
Secretary of the Interior to repurchase any federal oil, gas, geothermal, coal, oil shale, tar sands or
other mineral lease under circumstance defined in the section, including if a Federal agency failed to
act on a permit request within a regulatory or statutory time frame (Sec. 17 (b)(1). Compensation would be same as “...a lessee would receive in a restitution case for a material breach of contract”

(Sec. 17 (b)(5)). A mandatory 10 percent increase in compensation is added on if Secretary fails to
make a decision on a compensation request within 180 days of receipt of the compensation request
(Sec. 17 (b)(6)).

Compensation comes from “miscellaneous receipts” deposited in the Treasury from mineral leasing revenues (in other words, not subject to appropriations) (Sec. 17 (b)(5).

Applicants for compensation would not be required to have their case reviewed by the Interior Board of Land Appeals (Sec. 17 (b)(2).

* Prohibit the Interior Department from charging new fees to cover the costs of leasing and
drilling permit applications (Sec. 24).

* Undermine the bipartisan consensus reached on oil shale and tar sands royalties in the Energy
Policy Act of 2005. Sec. 29 of H.R. 4761 repeals the energy bill’s consensus provision and directs the
Interior Secretary to “model the royalty schedule for oil shale and tar sands leases based on the royalty program currently in effect for the production of synthetic crude oil from oil sands in the Province of Alberta, Canada.”

Sec. 29 would also provide for a significant reduction in royalties if the price of oil
drops below certain thresholds, even though current law already provides protections for initial
investments by oil companies should the price of oil drop significantly.

In sum, in addition to undermining environmental protections off our coasts, H.R. 4761 will encourage
the irresponsible development of unproven oil shale development technologies that have the potential
to cause significant damage to our Western public and private lands. In addition, the bill establishes a
wholly unmerited new federal entitlement program for the oil and gas industry, one which will lead to
industry raids on taxpayer dollars, at the same time pressuring regulators to issue defective drilling
permits that may cause irreparable harm to the environment. These and other provisions will not secure America’s energy future and should be opposed by all Americans who value the environmental values
of our nation’s public lands.

For more information, contact: Dave Alberswerth, TWS, (202) 429-2695.

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