S. HRG. 109–602 OIL SHALE PROVISIONS OF EPACT HEARING BEFORE THE COMMITTEE ON ENERGY AND NATURAL RESOURCES UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION ON THE IMPLEMENTATION OF THE OIL SHALE PROVISIONS OF THE ENERGY POLICY ACT OF 2005 GRAND JUNCTION, CO, JUNE 1, 2006 ( Printed for the use of the Committee on Energy and Natural Resources U.S. GOVERNMENT PRINTING OFFICE 30–202 PDF WASHINGTON : 2006 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 0ct 09 2002 10:51 Oct 20, 2006 Jkt 109602 PO 30202 Frm 00001 Fmt 5011 Sfmt 5011 P:\DOCS\30202.TXT SENERGY2 PsN: PAULM COMMITTEE ON ENERGY AND NATURAL RESOURCES PETE V. DOMENICI, New Mexico, Chairman LARRY E. CRAIG, Idaho JEFF BINGAMAN, New Mexico CRAIG THOMAS, Wyoming DANIEL K. AKAKA, Hawaii LAMAR ALEXANDER, Tennessee BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska RON WYDEN, Oregon RICHARD M. BURR, North Carolina, TIM JOHNSON, South Dakota MEL MARTINEZ, Florida MARY L. LANDRIEU, Louisiana JAMES M. TALENT, Missouri DIANNE FEINSTEIN, California CONRAD BURNS, Montana MARIA CANTWELL, Washington GEORGE ALLEN, Virginia KEN SALAZAR, Colorado GORDON SMITH, Oregon ROBERT MENENDEZ, New Jersey JIM BUNNING, Kentucky BRUCE M. EVANS, Staff Director JUDITH K. PENSABENE, Chief Counsel BOB SIMON, Democratic Staff Director SAM FOWLER, Democratic Chief Counsel DICK BOUTS, Professional Staff Member PATTY BENEKE, Democratic Senior Counsel (II) VerDate 0ct 09 2002 10:51 Oct 20, 2006 Jkt 109602 PO 30202 Frm 00002 Fmt 5904 Sfmt 5904 P:\DOCS\30202.TXT SENERGY2 PsN: PAULM C O N T E N T S STATEMENTS Page Baardson, John, CEO, Baard Energy, LLC, Vancouver, WA ............................... 52 Cook, Kim, Chairman of the County Commission, Rio Blanco County, CO ....... 28 Domenici, Hon. Pete V., U.S. Senator from New Mexico ..................................... 1 George, Russell, Executive Director, Colorado Department of Natural Resources .............................................................................................................. 16 Hatch, Hon. Orrin G., U.S. Senator from Utah .................................................... 7 Herbert, Gary, Lieutenant Governor, State of Utah ............................................ 12 McKee, Mike, Chairman of the County Commission, Uintah County, UT ......... 33 Meis, Craig, County Commissioner, Mesa County, CO ........................................ 38 Mut, Stephen, CEO of Unconventional Resources, Shell Exploration and Production Company, Denver, CO ...................................................................... 44 Salazar, Hon. Ken, U.S. Senator from Colorado ................................................... 3 Smith, Steve, Assistant Regional Director, The Wilderness Society, Denver, CO ........................................................................................................... 55 Treese, Chris, External Affairs, Colorado River Water Conservation District, Glenwood Springs, CO ......................................................................................... 48 APPENDIXES APPENDIX I Responses to additional questions .......................................................................... 67 APPENDIX II Additional material submitted for the record ........................................................ 81 (III) VerDate 0ct 09 2002 10:51 Oct 20, 2006 Jkt 109602 PO 30202 Frm 00003 Fmt 5904 Sfmt 5904 P:\DOCS\30202.TXT SENERGY2 PsN: PAULM VerDate 0ct 09 2002 10:51 Oct 20, 2006 Jkt 109602 PO 30202 Frm 00004 Fmt 5904 Sfmt 5904 P:\DOCS\30202.TXT SENERGY2 PsN: PAULM OIL SHALE PROVISIONS OF EPACT THURSDAY, JUNE 1, 2006 U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Grand Junction, CO. The committee met, pursuant to notice, at 9:45 a.m., at Grand Junction City Hall Auditorium, 250 North Street, Grand Junction, CO, Hon. Pete V. Domenici, chairman, presiding. OPENING STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW MEXICO The CHAIRMAN. We’ll come to order. Good morning, everyone. My name is Pete Domenici. I’m the Senator from the State of New Mexico. At this time in my life, I happen to have the honor of chairing the U.S. Senate Committee on Energy and Natural Re- sources. We’re having a field hearing in your city and in a little while, we’ll explain some basic rules to all of you. That’s just the way it has to be in order to conduct our business in an orderly manner. We hope that will be accommodating to you all and we’re most appreciative that you would all take some time, some of your precious time, to join us here today. So once again, first of all, good morning. I want to thank each of you for coming today, once again. I want to thank, in particular, Senator Salazar for joining me here today. He’s a member of the committee, which I have just enumerated to you. He’s been a very valued member, although he’s only been on the committee for a very short period of time. We have a very enviable record, that committee. In that short pe- riod of time, we produced the first comprehensive energy policy for these United States in the last 15 to 20 years. And we believe it has set the path and set the record straight, for quite some time, for America’s energy future. It was a real luxury on my part to have him as a member of the committee and I want to personally thank him, for the first time in the presence of the members of his constituency here in Colo- rado, for all the hard work he spent in putting that bill together and getting us to where we are today. He and I spent the day yesterday looking at some of the oil shale research projects currently underway, in this part of the United States. In a moment, I’ll ask him to make a brief statement as we commence this hearing. In the short time that he spent in the Sen- ate, he has proven to be a valuable part of the committee and I have come to value his input immensely. (1) VerDate 0ct 09 2002 10:51 Oct 20, 2006 Jkt 109602 PO 30202 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\30202.TXT SENERGY2 PsN: PAULM 2 I also want to welcome a very long-time dear friend, Senator Orrin Hatch, who is here before us. He’s sitting at the witness table. He could either be there or up here. I choose, every now and then, when I can, to put him down there. [Laughter.] The CHAIRMAN. He didn’t ask me why, but that’s why we’re going to do it this way. And then, when we’re finished with the testi- mony, he can come up here and join us, if he would like, and we hope that he will. Senator Hatch has recognized the urgency of our Nation’s energy situation and the potential that this resource brings for mitigating our energy shortfalls. As everyone here knows, we face enormous energy problems in this great country of ours and many are aware of the potential re- sources found in this region. With over two trillion barrels of oil in place, we all understand the significance of oil shale. The subject we are considering today can affect you here in Colo- rado, and your neighbors in Utah and Wyoming, in an immense way. We want to be part of having that take place in a manner that is good for all of you, not bad for you, that it is good for all of us, and good for America, because we believe that is clearly its potential. Some will argue that we need to conserve more. Others think adding increased efficiency to our cars and trucks or switching to renewables is the answer. There are others who would argue that oil shale is a bad bet, pointing to the past boom and bust. I believe that it is eminently clear that things are different now. We are more dependent on foreign oil than ever before. Our world is a more fragile and unstable place than it was before and energy prices have soared compared to where they were the last two times that we ventured into oil shale. But it’s also different in terms of what it means to you. We’re not going to follow the mistakes of the past. We’re going to make sure that we do this right for you, and with you, for your communities, and for the environment, and with your communities. With private citizens, and local government, and industry all work- ing together as a group, we can make this work for America, if it is going to work at all. And we note some signs up here that say: ‘‘Slow.’’ I don’t think anybody intends to go too fast successfully developing this vast oil shale resource. It will mean so much more to America than just finding one more source for energy. It could literally shake the world. Most are familiar with the traditional recovery process where the rock is mined and then heated in a retort. We’re also seeing an exciting new and innovative process, such as shale’s in- situ process that will heat the rock in the ground in order to re- cover the oil. Senator Salazar and I, and those who work with us, are very proud of the Energy Policy Act that we passed last year. This bill is already having an impact and is setting the stage for sound de- velopment of these resources over the next several years. As it re- lates to oil shale and tar sands, the energy bill directs the Sec- retary of the Interior to make certain lands available for leasing for Research and Development, complete a programmatic environ- mental impact statement for a commercial leasing program, issue VerDate 0ct 09 2002 10:51 Oct 20, 2006 Jkt 109602 PO 30202 Frm 00006 Fmt 6633 Sfmt 6633 P:\DOCS\30202.TXT SENERGY2 PsN: PAULM 3 final regulations, and implement a commercial leasing program in consultation with the States.