Cautious Approach to Development on Federal Lands Makes Sense Given Unknowns About the Technology and its Wider Impacts
Published 05-30-12
Submitted by Ceres
Citing technological uncertainties and a wide range of other risks, a new Ceres white paper supports a federal agency’s proposal to take a cautious approach to oil shale production in the western U.S.
At issue is the Bureau of Land Management’s proposal to focus oil shale production in Wyoming, Utah and Colorado on “Research, Development, and Demonstration” (RD&D) leases only and to reduce the available acreage to about 500,000 acres from nearly two million acres under an earlier plan.
“Given the wide array of uncertainties, BLM’s proposed leasing approach on oil shale makes sense,” said Ceres president Mindy Lubber, citing regulatory risks, water constraints and numerous other questions about various technologies being pursued to extract a non-liquid form of oil from shale rock. “Investors should be similarly cautious in evaluating future investment in this space.”
“Oil shale technologies are still highly speculative, and proving them to be commercially viable will be difficult and require a long period of time with uncertain outcomes,” said Paul Bugala, senior sustainability analyst, extractive industries, at Calvert Investments. “The little that state and federal regulators know about the environmental impacts, especially in the areas of water use and land reclamation, further indicates that caution should be exercised.”
While oil shale reserves beneath the three states in the Green River Formation are vast, holding more than three times the proven reserves of Saudi Arabia, the Ceres white paper, Investor Risks from Oil Shale Development, sends a strong cautionary message to policymakers, investors and companies alike.
The white paper, prepared by David Gardiner & Associates, LLC, identifies five key risks to oil shale development:
More than 70 percent of the Green River Formation oil shale resources lie beneath federal lands. BLM is presently considering public comments on its proposal to limit development to RD&D leases on 252,181 acres in Utah, 174,476 acres in Wyoming and 35,308 acres in Colorado. A decision is expected in fall 2012.
Investor Risks from Oil Shale Development contains three key recommendations for investors:
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Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres also directs the Investor Network on Climate Risk (INCR), a network of 100 institutional investors with collective assets totaling more than $10 trillion.
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