WESTAR CONFERENCE October 22, 2008 Bob Randall Colorado Department of Natural Resources

Oil Shale Overview: Oil shale resource Extraction methods Development timeline BLM activities with federal oil shale resources Colorado’s role and perspective

Oil Shale Resource Organic marlstone Kerogen Converted through pyrolysis Worldwide distribution: Up to 2 trillion barrels Domestic distribution: Between 500 billion and 1.1 trillion barrels Colorado resource: Estimated at approximately 500 billion

Extraction Methods Mine and Retort method Open pit or underground mine Retort Major challenges Process intensive Scale Water intensive Waste disposal

Extraction methods In-Situ Processes Electric-resistance heaters Superheated steam CO2 Microwave Major Challenges Groundwater protection Energy consumption

Challenges to development: Technology Economics Environmental impacts Air Water Wildlife Socioeconomic impacts Cumulative impacts

Federal Activities Energy Policy Act of 2005: Research, Development, and Demonstration (RD&D) Projects Programmatic Environmental Impact Statement (PEIS) Commercial leasing regulations

Pending RD&D Projects 160 acres each Preference rights to additional 4,960 acres 10-year term Focus in Colorado is on in-situ technologies State permit applications are not likely before Oil shale production from RD&D projects is unlikely within the next six years.

Shell’s RD&D Proposal Electric resistance heaters, with freeze wall to isolate from groundwater

Chevron’s RD&D Proposal Fracture shale then circulate hot, unconfined CO2 gas through the formation

EGL’s RD&D Proposal Circulation of superheated steam through closed-loop underground pipeline system

Programmatic Environmental Impact Statement (PEIS) BLM published Draft PEIS in December 2007 Final PEIS published in September 2008 Currently undergoing Governor’s consistency review Major provisions Would make 1,991,222 acres available “for application for leasing for commercial development” 359,798 acres in Colorado 630,971 acres in Utah 1,000,453 acres in Wyoming

Commercial leasing regulations Proposed regulations published in July Legislative prohibition expired on Sept. 30, Major provisions Royalty rates (5% or 12.5% after first 30 million barrels) NEPA compliance Environmental safeguards Chargeable production Minimum bonus bids

Colorado’s perspective Support for RD&D projects Will yield important information on technologies, impacts, and potential mitigation. Recommended “no action” alternative in PEIS Opposed finalizing regulations Recommended changes to regulations

For more information, please contact: Bob Randall Federal Lands Coordinator Colorado Department of Natural Resources