[Federal Register Volume 74, Number 211 (Tuesday, November 3, 2009)]
[Notices]
[Pages 56867-56869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26440]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[LLWO-3200000 L13100000.PP0000 L.X.EM OSHL000.241A]


Notice of Potential for Oil Shale Development: Call for 
Nominations--Oil Shale Research, Development and Demonstration Program

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice.

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SUMMARY: The Bureau of Land Management (BLM) solicits the nomination of 
parcels to be leased for Research, Development and Demonstration (R, D 
and D) of oil shale recovery technologies in the States of Colorado, 
Utah, and Wyoming.

DATES: Nominations for oil shale R, D and D leases can be made from 
November 3, 2009 through January 4, 2010.

ADDRESSES: Please send nominations to the BLM State Director for the 
State in which the parcel you are nominating is located: Dave Hunsaker, 
Acting State

[[Page 56868]]

Director, BLM, Colorado State Office, 2850 Youngfield Street, Lakewood, 
Colorado, 80215-7076; Selma Sierra, State Director, BLM, Utah State 
Office, 400 West 200 South, Suite 500, Salt Lake City, Utah, 84145-
0155; or Don Simpson, State Director, BLM, Wyoming State Office, 5353 
Yellowstone Road, P.O. Box 1828, Cheyenne, Wyoming, 82003.

FOR FURTHER INFORMATION CONTACT: Charlie Beecham, BLM, Colorado State 
Office, (303) 239-3773; Roger Bankert, BLM, Utah State Office, (801) 
539-4037; or Robert Janssen, BLM, Wyoming State Office, (307) 775-6206.

SUPPLEMENTARY INFORMATION: Pursuant to the authority of the Secretary 
of the Interior (Secretary) in section 21 of the Mineral Leasing Act to 
lease deposits of oil shale, on June 9, 2005, the BLM published in the 
Federal Register a notice entitled ``Potential for Oil Shale 
Development; Call for Nominations--Oil Shale Research, Development, and 
Demonstration (R, D and D) Program'' (70 FR 33753). While the BLM was 
processing the nominations, Congress enacted the Energy Policy Act of 
2005 (EPAct), which included section 369 (codified at 42 U.S.C. 15927 
and amendments to 30 U.S.C. 241). Section 369 addresses oil shale 
development and directs the Secretary to make public lands available 
for conducting oil shale research and development activities. 42 U.S.C. 
15927(c). After processing the nominations received in response to the 
2005 notice, the BLM issued six R, D and D leases, which became 
effective in 2007.
    On January 15, 2009, the BLM published in the Federal Register (74 
FR 2611) a notice for a call for nominations for a second round of R, D 
and D leasing. On February 27, 2009, the BLM published in the Federal 
Register a notice entitled ``Potential for Oil Shale Development; 
Withdrawal of the Call for Nominations--Oil Shale Research, 
Development, and Demonstration (R, D and D) Program and Request for 
Public Comment'' (74 FR 8983). In withdrawing the January 15, 2009, 
solicitation of parcels for R, D and D leases, the Federal Register 
notice stated, ``The new administration intends to review and 
reconsider certain aspects of the current solicitation, including lease 
acreage and the rules that would govern conversion of an R, D and D 
lease to a commercial lease, particularly those related to royalty 
rates.'' This notice also requested comments on the terms and 
conditions of any future R, D and D leases the BLM may issue.
    The BLM received 51,685 comments from entities or individuals that 
may be grouped in five principal categories: Energy industry, academia, 
environmental groups, Federal/State/local government agencies, and 
citizens/citizen groups. The energy industry's comments generally 
suggested that (1) the acreage size for the second round of R, D and D 
should be large enough to allow expansion into potential commercial 
operations and (2) the royalty is too high to encourage investment. The 
academic commenters suggested that additional R, D and D is needed, 
particularly to test a low temperature process that would not impact 
water supplies. In general the environmental groups suggested that no 
additional leases be offered until the results of the current 
experiments are known and the BLM has completed a full, programmatic 
Environmental Impact Statement on the current oil shale R, D and D 
leases. One environmental entity suggested a 10-year R, D and D lease 
term, a 12.5 percent royalty rate, and in the event of a second round 
of R, D and D leasing, that acreage size should be limited to 160 
acres, with no preference right lease acreage. Another environmental 
commenter recommended that the Department of the Interior engage in a 
mid-term assessment of the five R, D and D leases in Colorado, and that 
any future R, D and D lease offering should be conservative in size, 
scope, and lease terms. Commenters from the Federal/State/local 
government agencies generally stated that because the BLM has 
implemented a number of the provisions in the EPAct to promote oil 
shale development, the BLM should not make more land available for 
leasing through a second round of R, D and D. The citizen commenters 
were divided in their opinions. Some supported oil shale development 
primarily because they view oil shale development as an important 
component in the country's efforts to become energy independent. Others 
opposed oil shale development chiefly because of their concerns about 
potential adverse environmental impacts. One commenter from this 
category suggested that the current Federal royalty regime be abolished 
and replaced with an annual fee based on the value of the oil shale 
product.
    By this notice, the BLM is soliciting the nomination of parcels, 
not to exceed 160 acres, for the conduct of oil shale R, D and D under 
a 10-year lease agreement. Applicants may also identify up to 480 
additional, contiguous acres that the applicant requests the BLM to 
reserve for a preference lease area to be included in a commercial 
lease. Thus, any resulting commercial lease will be for a tract of a 
total of no more than 640 acres. The lease size available for 
commercial development is being reduced from the 5,120 acres in the 
first round of leasing because the substantial reserves represented by 
640 acres are more than adequate for a major oil shale production 
operation.
    The intent of this second round of R, D and D leases is to focus on 
the technology needed to develop the resources into marketable liquid 
fuels. Knowing the costs and benefits associated with the new 
technologies will inform the Secretary's future decisions about whether 
and when to move forward with commercial scale development and allow 
the Secretary to assess its impact on the environment, including an 
assessment of those impacts in light of climate change.
    The lease form for this round of R, D and D leases has been revised 
from the one published in the Federal Register on June 9, 2005 (70 FR 
33755). The revised R, D and D lease form is available at: http://www.blm.gov/wo/st/en/prog/energy/oilshale_2.html.
    The R, D and D nominations will be reviewed by an Interdisciplinary 
Review Team. For this Team, the BLM will request the participation of a 
representative from each of the States of Colorado, Utah, and Wyoming, 
as appropriate, and the Departments of Defense and Energy. The criteria 
for awarding an R, D and D lease will be the: (1) Potential for a 
proposal to advance knowledge of effective technology; (2) Economic 
viability of the applicant; and 3) Means of managing the environmental 
effects of oil shale technology. The BLM will conduct an analysis under 
the National Environmental Policy Act (NEPA) of the proposals prior to 
awarding any R, D and D lease. Each applicant will be responsible for 
the costs associated with the NEPA analysis of the R, D and D lease 
application. The time required for analysis and documentation under 
NEPA may differ depending on whether the application is for a tract 
that has previously been the subject of NEPA analysis for oil shale 
operations, the method of shale oil extraction, and whether the 
application involves mining or in-place shale oil recovery. 
Accordingly, some R, D and D leases may be awarded prior to others. If 
the BLM receives two or more applications to lease the same lands and 
determines that more than one meets the requirements for R, D and D 
leases, the BLM will issue the lease to the qualified applicant with 
the superior proposal, as determined by the BLM, having

[[Page 56869]]

considered the recommendation of the Interdisciplinary Review Team.
    Lease nominations must, at a minimum, contain the following 
information:
    (1) Name, address, and telephone number of the applicant, and the 
representative of the applicant, who will be responsible for conducting 
the operational activities;
    (2) Statement of qualifications to hold a mineral lease under the 
Mineral Leasing Act of 1920. Qualification requirements can be found in 
43 CFR subpart 3902;
    (3) Description of the lands, not to exceed 160 acres, together 
with any rights-of-way required to support the development of the oil 
shale R, D and D lease;
    (4) A description of any additional lands you request be reserved 
for a preference right lease, adjacent to your R, D and D lease area 
and not exceeding 480 acres;
    (5) A narrative description of the proposed methodology for 
recovering oil from oil shale, including a description of all equipment 
and facilities needed to support the proposed technology;
    (6) A narrative description of the results of laboratory and/or 
field tests of the proposed technology;
    (7) A schedule of operations for the life of the R, D and D project 
and proposed plan for processing, marketing, and delivering the shale 
oil to the market;
    (8) A map of existing land use authorizations on the nominated 
acreage;
    (9) Estimated shale oil and/or oil shale resources within the 
acreage of the nominated R, D and D parcel and the preference right 
area;
    (10) The method of shale oil storage and the method of spent oil 
shale disposal;
    (11) A description of any interim environmental mitigation and 
reclamation;
    (12) The method of final reclamation and abandonment and associated 
projected costs of final reclamation;
    (13) Proof of investment capacity to fund the proposed project;
    (14) A description of the commitments of partners, if any;
    (15) A statement from a surety qualified to furnish bonds to the 
United States Government of the bond amount for which the applicant 
qualifies under the surety's underwriting criteria;
    (16) A non-refundable application fee of $6,500;
    (17) Information that demonstrates the potential to:
    (a) Minimize water usage;
    (b) Protect surface and subsurface waters;
    (c) Minimize life cycle greenhouse gas emissions and air pollution, 
including fugitive dust emissions;
    (d) Capture and use natural gas onsite;
    (e) Employ carbon capture and sequestration technology;
    (f) Employ renewable energy and energy efficient technologies;
    (g) Avoid and minimize impact on wildlife and habitat; and
    (h) Minimize surface disturbance for roads and infrastructure/
facilities.
    Applications submitted for lands within any multi-mineral leasing 
area must demonstrate the potential capability to extract both shale 
oil and nahcolite or demonstrate a potential capability to extract one 
mineral while preserving the other for future recovery.
    Applicants should prominently note and segregate any information 
submitted with their application that contains proprietary information, 
if the disclosure of this information to the public would cause 
commercial or financial injury to the applicant's competitive position. 
The BLM will protect the confidentiality of such information to the 
extent allowed by law. Any Freedom of Information Act requests for such 
information will be handled in accordance with the regulations at 43 
CFR 2.23.
    The lease terms and conditions for this round contain substantial 
diligence requirements to ensure operational effectiveness and 
accountability as well as to bring the new technology to the market 
effectively and efficiently. Specific timeframes are included within 
which to conduct specified/approved activities such as submitting the 
Plan of Development, obtaining state permits, developing 
infrastructure, and submitting required quarterly reports. As long as 
the lessee is not selling oil shale products or producing commercial 
quantities from the leasehold, no royalty will be collected during the 
lease term.
    The BLM may issue a commercial lease, if at all, only after: (1) 
The lessee demonstrates that the applicant's technology tested in the 
original lease of up to 160 acres has the ability to produce shale oil 
in commercial quantities; (2) The BLM complies with NEPA and concludes 
through its evaluation under NEPA that commercial scale operations of 
the applicant's technology at that site do not pose environmental or 
social risks unacceptable to the BLM; (3) The lessee secures adequate 
bonding to cover all costs associated with reclamation and abandonment 
of the expanded lease area; (4) The lessee pays a bonus based on the 
fair market value of the lease to be determined by the BLM; and (5) The 
lessee, in conjunction with BLM, consults with State and local 
governments and affected tribes on a strategy to mitigate socioeconomic 
impacts, including, but not limited to, the infrastructure to 
accommodate the required workforce.
    If the BLM issues a commercial lease, the lessee would have the 
exclusive right to acquire, along with the R, D and D lease area, lease 
rights to any or all portions of the preference lease area up to a 
total of 640 contiguous acres, upon compliance with the terms and 
conditions specified in the R, D and D lease agreement. Any commercial 
lease shall be subject to payment of rents and royalties at rates 
established in compliance with statutes and regulations in effect at 
the time of conversion.
    The BLM will accept only one application per entity. A lessee may 
propose an amended plan of development if its research indicates that a 
different technology would more effectively achieve production in 
commercial quantities.
    The non-refundable application processing fee has increased from 
$2,000 to $6,500 per application to cover the anticipated cost of 
processing these applications.

Robert V. Abbey,
Director, Bureau of Land Management.
[FR Doc. E9-26440 Filed 11-2-09; 8:45 am]
BILLING CODE 4310-84-P