Sen. Orrin Hatch
(R-Utah) today called on the Senate Committee on Energy and Natural Resources to lift a moratorium that essentially bars the U.S. Bureau of Land Management (BLM) from leasing land for commercial oil shale development.
During his testimony, Hatch also presented a letter from Utah Gov. Jon M. Huntsman Jr., who asked committee members in the letter to lift the oil shale-lease moratorium, calling it a "matter of great importance for Utah and the nation."
Hatch also submitted a written statement to the committee in which he stated his stand on oil shale and asked committee members about their stand.
"The question . . . for the members of this committee, and I should add, for the Democratic leadership of Congress, is whether you will adopt the anti-oil agenda of the environmental movement as an element of your own energy policy." Hatch said in the statement. "So far, I have heard of proposals to tax successful energy production, to investigate the oil futures markets, to ban Canadian oil imports in favor of oil from Venezuela, Russia, and the Middle East, and to call for delay after delay in the commercial production of oil shale. ... These policies would not produce one drop of oil."
The moratorium was imposed as part of the Consolidated Appropriation Act of 2008 and it inconsistent with the Energy Policy Act of 2005 (EPACT), which directed the BLM to lease several tracts of federal oil-shale land for research and to issue commercial-leasing regulations.
Hatch said oil shale and tar sand development are more economical, environmentally responsible and require less water than ethanol production. What's more, he told committee members, Utah and Colorado have between 800 billion and two trillion barrels of recoverable oil.
Because the U.S. is so dependent on foreign oil, the senator added, the nation is sending "$600 billion overseas, often to countries that are our enemies. We need to use that money for development" of domestic oil to meet our energy needs.
"We need to wake up and stop sending money to our enemies throughout the world," Hatch said.
The full text of Hatch's written statement follows:
Mr. Chairman, I thank you for holding this hearing today and for the opportunity you have given me to add my testimony. As you know, working closely with members of this committee and with Senators Pete Domenici, Wayne Allard, Robert Bennett and Ken Salazar,
I introduced the Oil Shale and Tar Sands Development Act, which was used as a basis for Section 369 of the Energy Policy Act of 2005.
I have heard, from press reports, that Senator Salazar
has a new proposal, which, according to the reports seeks a more thoughtful approach to oil shale development. I have not seen it yet, but to be honest, Mr. Chairman, I would argue that the road we are on has been pretty darn thoughtful. In fact, Sec. 369 specifically allows governors and other officials in relevant states decide to how quickly or slowly to move forward on oil shale production in their respective states. Apparently, Mr. Chairman, my colleagues on the other side of the aisle prefer a different approach when it comes to Utah. They would rather not give our governor the same courtesy, and instead would prefer to control the timing of that decision themselves.
Let me be frank, Mr. Chairman, it's an offense to me that this decision is being withheld from Utah's governor and other elected officials in my state, and the fact that there are efforts to delay the decision even further only deepens the offense.
I have a copy of a letter from Governor Jon Huntsman, Jr., of Utah to the Senate Appropriations Subcommittee on Interior and Related Agencies. He asks the committee to rescind the moratorium on implementing Sec. 369. In his letter, Governor Huntsman states,
"I recommend lifting those restrictions. Utah is home not only to substantial oil shale reserves...but also to businesses willing to develop oil shale using new technology that will make extraction cleaner and more efficient. We have...state and federal regulators who are capable of ensuring that this resource is developed in an environmentally responsible manner."
I ask that the governor's letter be included in the record. Thank you Mr. Chairman.
Let me take just a minute to lay out what our current law on unconventional oil, actually does. First, it sets up a Research and Development Leasing program on BLM lands. That program is now underway, and I believe the federal government has shown a great deal of thoughtfulness and caution with regard to how those RandD leases were granted. Next, the law calls for a multi-state Programmatic Environmental Impact Statement to consider the larger environmental issues associated with the development of oil shale and tar sands. Sec. 369 pushed for a vigorous time frame for the completion of the P.E.I.S., and the BLM responded to that direction by denying an extension to an earlier comment period request by the state of Colorado. Admittedly, that was a regrettable outcome of the tight schedule given to the BLM. I was pleased, however, that the BLM did provide an extra month to the comment period for the Draft PEIS, giving a full four months for the public to comment on the study. After the release of the Final PEIS, Sec. 369 directs the Interior Secretary to,
"Consult with the Governors of States, interested Indian tribes, and other interested persons, to determine the level of support and interest in the States in the development of tar sands and oil shale resources. If the Secretary finds sufficient support and interest exists in a State, the Secretary may conduct a lease sale in that state under the commercial leasing program regulations."
In my view, no further impediment is needed to ensure that a thoughtful approach is pursued and controlled by state and state and local officials.
Finally, Sec. 369 establishes a Task Force on Strategic Unconventional Fuels, which includes the governors and local officials of the relevant states to consider the relevant issues surrounding unconventional oil production. A report by the task force is available to the public. It addresses many of the questions regarding oil shale development and gives voice to the concerns held by some participants of the task force. Those concerns need to be heard and addressed. That is the purpose of the PEIS and of the requirement that the Secretary consult with decision makers in each state.
In the final analysis, if the decision is to move forward, it will then be up to members of industry and their investors to determine when the technology is ready for commercial operation. It will be a business decision that no government official is well equipped to make.
But there are a number of very legitimate questions and concerns that government officials and the public do have a role in raising. Let's take a look at some of those.
In the late 1970's, the government invested very heavily in a major effort to develop oil from oil shale in western Colorado. When OPEC dropped the price of oil down to $10 a barrel, a dramatic boom turned into a devastating bust in the blink of an eye. At that price, even conventional oil production was not profitable. That is an event that is well remembered by those who lived through it, and I sympathize with some of their negative views associated with oil shale production.
However, that was a quarter of a century ago. Today is a very different world than in the late 1970's and early 80's: First of all, there is no huge government corporation spending big government dollars on oil shale development.
Second, OPEC no longer has anywhere near the spare capacity necessary to flood the world market. In fact, due to the meteoric rise in global demand for oil, I doubt OPEC has the capacity to cause even a significant drop in the price of oil.
Thirdly, technology and regulatory protections in every aspect of oil, gas, and mining have matured impressively since the early 1980's. Those advances not only make oil shale development much more viable, but they also ensure much better protections for the environment.
Some critics of oil shale and tar sands production have raised air quality concerns. Let's be clear, there is no aspect of Sec. 369 which would exempt industry from any federal or state air quality laws or regulations. In fact, these industry members plan to comply and even exceed air quality requirements. And they also express a readiness to address climate change questions on the same schedule that other industries may be required control carbon emissions.
One Utah company called CRE Energy is now building a pilot plant to demonstrate their ability to produce upgraded syncrude from oil shale with little or no carbon emissions.
Another concern is the acreage and wildlife habitat that would be disturbed by oil shale development. It's a sobering fact that with every new home, ski cabin, road, and hotel we build in this country, we are destroying wildlife habitat. Why is it that such new activities occur daily in all of our states, but we only raise our eyebrows if the acreage is used for oil production?
Mr. Chairman, I'm a fan of ethanol production. I was the sponsor of the CLEAR Act which provides the current tax incentives for E-85 infrastructure and E-85 fuel when sold for vehicle use at retail. But I'm also aware that it takes a full acre of corn to produce about five barrels of oil equivalent ethanol.
Mr. Chairman, do you know how many barrels of oil would come from one acre of oil shale? On the low end, one acre of oil shale will produce about 100,000 barrels of oil. On the high end, one acre of oil shale will produce one million barrels of oil.
Let me make sure everyone in this room heard me correctly: that's about five barrels of ethanol for each acre of corn and between 100,000 and one million barrels of oil for each acre of oil shale.
A typical acre of oil shale will produce ten times more oil than a typical acre of conventional oil. There is no other hydrocarbon resource on Earth that is this concentrated in terms of yield per-acre basis.
So I hope the members of this committee are able to contain themselves when opponents express their "concern" for land disturbance and wildlife habitat related to oil shale development. Unlike construction projects we accept every day, oil shale companies are present on the land only temporarily and are will restore the land to nature when they are finished.
Another very legitimate question often raised with regard to oil shale development is water availability in the West. No doubt, water is always a concern in Colorado and Utah, which is the second driest state in the Union. So I have to say I was initially surprised that not one company interested in oil shale development that I have talked to considers water availability to be a significant constraint.
Is that because they are ignorant of water constraints in the West? Actually the opposite is the case. They are very well aware of water constraints and have each developed technology that requires moderate amounts or even no water for oil shale production.
Let's go back to ethanol for a moment. And I want to emphasize that while I oppose federal mandates for ethanol production, I'm a strong supporter of ethanol incentives. But one barrel of ethanol requires somewhere between 800 and 1,700 barrels of water just to grow the corn. I am happy to report that, so far, most corn for ethanol receives this amount of water almost exclusively from rainfall. However, as corn is grown in some of the drier states, it requires approximately 785 barrels of irrigated water for every barrel of ethanol produced. Then, the processing of ethanol fuel takes an additional two to four barrels of water for each barrel of ethanol.
The Department of Energy has calculated that with regard to oil shale production, the water needed for dust control, mining, processing, upgrading, and land reclamation would combine for approximately three barrels of water for each barrel of upgraded syncrude.
A favorite approach by opponents of oil shale production is to tie oil shale production being planned in the U.S. to all the alleged negative aspects of oil sands production in Alberta, Canada, and then to completely ignore any comparison to the gigantic economic and energy supply successes that Canada has enjoyed by developing unconventional resources.
From the standpoint of water and natural gas use, there is not that much comparison to be made between the processes being used and considered in the two countries. Mr. Chairman, might I suggest that we evaluate oil shale and oils sands production in the United States based on the actual processes being developed by companies in the U.S.
With regard to oil sands, Mr. Chairman, of the two oil sands companies I'm aware of in Utah, both have developed separate methods that use water-based, environmentally benign solutions that effectively drop the sand right out of the bitumen at room temperature and then the water solution is recycled back into the process. Their energy inputs are basically the electricity to run the water pump. Rather than pretending to evaluate dirty phantom technologies that would never be used. Let's look at what U.S. companies are actually pursuing.
For the most part, the very legitimate questions surrounding oil shale development have very good answers. But I've come to the conclusion that some opponents of oil shale would rather ignore the legitimate answers to their concerns, and when that's the case it tells me that their concerns are smokescreens for a hidden agenda. There are a number of environmental groups that have made it clear by their actions that they just plain oppose oil production and are especially afraid of any new sources of oil, such as from oil shale or from tar sands.
The question for you, Mr. Chairman, and for the members of this committee, and I should add, for the Democratic leadership of Congress, is whether you will adopt the anti-oil agenda of the environmental movement as an element of your own energy policy. So far, I have heard of proposals to tax successful energy production, to investigate the oil futures markets, to ban Canadian oil imports in favor of oil from Venezuela, Russia, and the Middle East, and to call for delay after delay in the commercial production of oil shale. At times, it almost appears that the anti-oil agenda is the ONLY element of the energy policy of some members of Congress.
These policies would not produce one drop of oil. In fact, they are sure to achieve the opposite effect. Last time I checked, less oil meant higher prices and economic harm, and more oil meant lower prices and economic benefits.
Mr. Chairman, I'm being frank, because I know that you and the members of this committee, for the most part, are not anti-oil. Rather, I believe that members of this committee on both sides understand energy. You understand that liquid fuels are produced and sold in a global market, that global demand is outstripping global supply, and that no combination of alternative fuels can match the scale of the global oil deficit coming our way.
The total proven oil reserves in the world are approximately 1.6 trillion barrels of oil. Current proven reserves in the U.S. are a mere 22 billion barrels.
It is a well-established fact that oil shale resources in Utah and Colorado hold somewhere between 800 billion and two trillion barrels of recoverable oil. Can we get it out tomorrow? No. Can we begin to develop it in a few years? Yes. Is it economic at $40 a barrel or less? Yes.
I would like to read a statement by one of our nation's foremost experts on oil shale, Dr. James Bunger. He states:
"By proving the commercial viability of a suite of technologies for different resource characteristics, Canada was able to book 174 billion barrels of oil sands as proven, making them the second largest holder of proven reserves in the World, second only to Saudi Arabia at 260 billion barrels. It should be the goal of the private sector and the United States government to prove technologies that will allow oil shale ... to be reclassified from its current status of in-place resource, to "proven reserves." Achieving a goal of reclassifying 400 billion barrels as proven is well within our capabilities and the characteristics of the resource and, if achieved would make the US the holder of the largest oil reserve in the World."
Mr. Chairman, I ask that Dr. Bunger's full statement be made part of the record. Thank you Mr. Chairman.
It would be nice to pretend we're not dependent on oil; that we can skip immediately to some yet-to-be identified alternative, 30 years down the line. But we can't. Truckers and farmers need diesel today. Mom's need to get to soccer and ballet practice tonight, Americans want to visit their national parks this summer.
Because we have made domestic oil production so difficult in this nation, we now send $600 billion each year to our foreign competitors for oil, and they're laughing all the way to the bank. This is a huge and constant stream of money leaving our nation once and for all. We are funding the rise of our international competitors and causing our own decline. It is a fact largely ignored by the media, by the current presidential candidates, and by the current Congressional leadership. But it's a trend this committee cannot ignore.
Mr. Chairman, we must pursue alternative sources of energy, but in the meantime, there is no room in our energy policy for an anti-oil or -oil-shale attitude
If leaders in Colorado and Wyoming wish to slow down oil shale and sands production in their states, then I congratulate them, because that power was given to them years ago in Sec. 369. But it is not right to artificially slow shale development down in areas that are prepared to meet the challenges of supplying our nation with domestic oil. It's not right for my state and it's not right for Americans who are sending their money to our competitors overseas.
Thank you, Mr. Chairman.
