BLM director Bob Abbey today announced the federal agency has reviewed nominations for three potential lease-holders — ExxonMobil and Natural Soda in Colorado and AuraSource in Utah – and will now forward them on to state regulatory agencies for the next phase of consideration.

“The potential for oil shale development in Colorado, and the economic opportunity that it represents, is huge,” Ritter said in a release. “But the prospect of commercial-scale activities raises significant questions about how oil shale can be successfully integrated into our state’s economy and how we can protect the state’s environment, water, wildlife and communities.”

Exxon ramped up for a major oil shale development boom on Colorado’s Western Slope in the late 1970s and early 80s but ultimately pulled out, leaving towns like Battlement Mesa and Parachute overnight ghost towns.

After six R&D leases were issued in 2007 under the Bush administration, U.S. Secretary of the Interior and former Colorado Sen. Ken Salazar in 2009 questioned the Bush-era leasing program and set significant limitations on the size and length of the next round of R&D leases.

Critics say the process is far too unproven, requiring enormous amounts of coal-generated electricity and water – and that it would devastate the fragile landscapes of the West.

“People have been trying to figure out how to suck the hydrocarbons out of these rocks for over a century,” former oil shale worker Craig Thompson said in a release. Thompson is now a professor of engineering at Western Wyoming Community College and on the board of the National Wildlife Federation.

“No one has found an economic solution. When Exxon pulled the plug on their $5 billion gamble and laid off 2,200 workers, the West learned a bitter lesson. The last thing we need is another pipe dream and another economic ‘bust.’”

An Exxon spokesman did not immediately return a call requesting comment.

Gov. Bill Ritter and industry officials are scheduled to make an announcement at 1:30 p.m. today on the West Steps of the State Capitol in Denver, announcing “historic new agreements that will protect hundreds of square miles of important wildlife habitat on the Western Slope,” according to a release from the governor’s office.

State officials, speaking on the condition of anonymity because full details are embargoed until 1:30, said the agreements allow operators to take care of wildlife mitigation requirements under the state’s amended oil and gas regulations up front and avoid a time-consuming well-by-well review process by the Colorado Division of Wildlife.

Under wildlife mitigation plans, the Colorado Oil and Gas Conservation Commission and CDOW will identify the most appropriate locations for roads and well pads prior to the permitting process and thereby allow operators to fulfill their wildlife mitigation obligations in a more streamlined fashion.

One of the consistent complaints from operators about the amended drilling regulations before and after they were adopted in the spring of 2009 – and thereby a Republican rallying cry on the campaign trail to some degree this year – was that the new CDOW consultation requirement was unnecessarily slowing down natural gas drilling.

In a previous interview with the Colorado Independent, COGCC director David Neslin said only about 7 percent of permit applications were being flagged for wildlife concerns and any issues were being resolved between the operators and CDOW without the COGCC getting involved.

“I don’t have people coming in and saying it’s taking 80 days to get a permit – that’s just not happening – or the Division of Wildlife is being irresponsible,” Neslin said last spring. “I haven’t heard much of that.”

Today’s announcement appears to be a continuation of that streamlining process on a much larger scale. There has been ongoing debate in the governor’s race about the degree to which the amended drilling regulations should be further tweaked or scrapped altogether, as some Republicans suggest.

According to the Grand Junction Daily Sentinel, Williams, the largest natural gas producer on the Western Slope, questioned the need for such reporting and said the associated costs would be substantial.

“Will this have any impact on climate change? I say no. Is the regulation necessary? I don’t think so as an industry person,” Williams air quality practice manager Rick Matar told the paper.

The Sentinel reported EPA estimates that the “industry’s greenhouse-gas emissions are the second-largest source of human-made methane emissions in the United States,” and that “pound for pound, methane is more than 20 times as effective as carbon dioxide in trapping heat in the atmosphere.”

But Matar countered with statistics showing humans account for just 3.4 percent of all greenhouse gas in the atmosphere, and that the EPA believes the oil and gas industry accounts for only 5 percent of that.

Jeremy Nichols, climate and energy program director for the WildEarth Guardians, said the EPA merely wants to find out for sure: “I would think industry would want to embrace this.”

In other Western Slope energy news, the Pitkin County commissioners Wednesday delayed action on stiff new drilling regulations that would exceed those enforced by the Colorado Oil and Gas Conservation Commission (COGCC).

Industry representatives wanted an opportunity to provide input before the county tightens its regulations, according to the Aspen Daily News.

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The Associated Press reported late last week that a federal judge approved a first-of-its-kind settlement requiring the U.S. Bureau of Land Management to suspend 38,000 acres of Montana oil and gas leases to assess how oil fields contribute to ongoing climate change.

Conservationists sued to block lease sales in 2008, claiming the industry allows too much waste and emits too many green house gases using technology that could and should be updated to mitigate the impacts of widely accepted scientific data on global climate change.

The deal approved by U.S. District Judge Donald Molloy in Missoula suspends 61 leases for 90 days while they go through a new round of environmental reviews.

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Colorado River Water Conservation District board member Dave Merritt told the Garfield County commissioners Monday that the Colorado River basin, which supplies water to much of the southwestern United States, is “way behind in snowpack” and only “a little bit better than 2002 right now,” according to the Glenwood Springs Post Independent.

Right now the basin is only at 72 percent of its average annual snowpack for this date, compared to 74 percent statewide. Merritt added that weather patterns could change, leading to a typically wetter March and April, which would rectify the situation to some degree.

But until that happens, stakeholders from the energy industry to the agricultural sector to skiers and rafters to people who like just green lawns should be eyeing the skies nervously.

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His efforts are reportedly based on a two-year survey of 93 shepherds conducted by Mesa State College Spanish professor Thomas Acker for the Migrant Farm Workers Division of the nonprofit Colorado Legal Services group.

The survey of nearly one-third of the estimated 300 immigrant shepherds currently working in Colorado found extremely low pay (sometimes as little as $2 an hour), long hours (up to 90 a week), total isolation in the state’s most remote regions and subpar living conditions.

Ranching representatives pointed out that many of the state’s shepherds return to Colorado each year under the federal government’s H-2A visa program, but advocates counter they’re compelled by even worse poverty in their home countries.

Kagan told the Daily Sentinel he hopes to raise the shepherds’ current minimum wage of $750 a month to $1,000 a month, although he admitted even that amount was “still pretty paltry pay and far, far less than legal migrant farm workers get.”

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Not so fast, say Aspen officials, who are arguing today that the data is flawed.

From the Denver Post report:

Waterhoggers?

Colorado Front Range residents are using less water, but some parts of the Western Slope have seen per capita water use explode in the past decade, according to a new state study…

Residents of Pitkin County, home of Aspen, used 1,851 gallons per person each day, the data show, as Elbert County folks used 111 gallons each.

That reported use is more than 10 times the national average of 179 gallons, and nearly eight times the state average of 240 gallons.

But in an Aspen Daily News story today, reporter Catherine Lutz noted that the Denver Post never indicated in its story that the report is still a draft:

[The Colorado Water Conservation Board’s] report, however, is a draft, and staffers are working on a number of inconsistencies they’ve been alerted to since it came out in June, said CWCB’s Eric Hecox, section chief of the water supply planning division…

The Pitkin County data was flagged for follow up, he said, because it was assumed there had to be some inconsistencies on how either the total water delivery or total population was calculated. For example, the population of Aspen’s water service area had somehow decreased by 10,000-15,000 people, Hecox said. And there are many communities in Colorado, like Aspen, that have high second-home owner and tourist populations that have to be factored in.

Meanwhile, wrote Lutz, the story of Aspen’s excessive consumption was picked up by local radio stations KAJX and KSNO—as well as 9News.com and The Associated Press.

County Commissioner Rachel Richards, who sits on several water boards, bemoaned the bad—and potentially inaccurate—press:

Richards said the reporting of the study could “take on a life of its own,” reinforcing the stereotype that the Western Slope uses water heavily and potentially influencing things like discussions over trans-basin diversions.

“I’m personally very concerned about reading this because Aspen has a great story to tell about the conversation measures it has put in in the last decade,” she said.

That includes extensive work on leak detection and repair, and tiered water rates that charge more for more water use. The rate system was revised in 2005 and again in 2006, and resulted in a 22 percent reduction in annual water usage by Aspen water customers, according to the city water department’s Web page.

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According to National Public Radio, ExxonMobil, the largest, most powerful lobby in Washington, is now conflicted on the climate change legislation passed by the U.S. House this summer and now languishing in the Senate.

While the natural gas lobby has been battling hard to get more love from the Senate (in the form of tax incentives and other concessions) for what they point out is the cleanest burning fossil fuel and a bridge to a renewable future, ExxonMobil has spent millions fighting Congress on cap and trade and other aspects of a climate bill. Now ExxonMobil seems to be playing both sides of the fence – an interesting dilemma as pressure mounts on the Obama administration and Congress to produce a meaningful bill.

And Reuters today is reporting ExxonMobil can back out of the XTO deal if hydraulic fracturing, or “fracking,” is somehow deemed illegal or regulated to the point of being too expensive. The process of injecting gas wells with high-pressure water, sand and chemicals to free up more gas is the subject of U.S. Rep. Diana DeGette’s (D-Colo) FRAC Act, which seeks to remove a Safe Drinking Water Act exemption for the process and put in under EPA oversight.

Most natural gas industry officials and some state regulators say the process is being adequately handled by state regs and presents no real danger to groundwater supplies. But community activists and environmentalists continue to challenge industry claims on fracking.

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Experts estimate up to one trillion barrels of oil could be squeezed from the shale rock and sands, but the process consumes huge amounts of water and carries with it potentially devastating environmental impacts.

On its way out the door last fall, the Bush Interior Department tried to lock in rules that would require oil shale royalty rates for production on public lands starting at about 5 percent – far below traditional oil and gas royalty rates because of the speculative nature of the resource.

In its ongoing investigation of former Bush Interior Secretary Gale Norton, who later signed on as an attorney with Dutch Royal Shell – one of the leading researchers of oil shale production in Colorado – the Times turned up e-mails where Norton tips her hand on the strategy she suggested for locking in royalty rates despite changing administrations.

Norton, who’s being probed by the Obama Justice Department for allegedly using her Interior post to secure a job at Shell, said she thought Obama Interior Secretary Ken Salazar might be more inclined to defend the Bush rates because of legal challenges from environmental groups.

But a Shell official questioned that approach because it could seem as if they were admitting the 11th-hour process was flawed and because the rates were too low.

Oil shale production involves either mining shale and super-heating it to force out the kerogen, or organic matter, in order to refine it into petroleum; or heating the shale underground in what’s known as in-situ production. Both methods require huge amounts of water and electricity, and environmentalists argue research and development funds would be better spent on renewables.

Another speculative source of future energy – shale gas – was debunked by an expert this week at the Association for the Study of Peak Oil and Gas conference in Denver. Arthur Berman, a geological consultant from Texas, said shale gas plays may not be nearly as promising as some proponents claim, and that speculation on the resource may be the next energy bubble to burst.

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Making his way around parts of the Western Slope congressional district he represented for twelve years in Washington, McInnis has been pounding on a theme familiar among Republican speakers and audiences this summer: McInnis blasted the Governor for backing new, more environmentally friendly oil and gas drilling regulations that went into effect in the spring.

“Those rules and regulations were directly targeted at the natural gas industry,” McInnis told the Glenwood Springs Post-Independent on Tuesday. “And this is the result of what happened: They left the area.”

McInnis, who’s vying with two other candidates for the GOP nomination to take on Ritter next year, made similar comments in Edwards on Monday, Grand Junction on Tuesday and Durango on Wednesday. “[Ritter] makes bets, and it’s our skin in the game,” McInnis told the Grand Junction Daily Sentinel.

But the energy and natural resources attorney for the Denver office of Hogan & Hartson is out of touch with the very constituents he used to represent in Congress, according to Ritter’s office, which aggressively defended the governor’s record on jobs creation, the environment and support for the state’s natural gas industry.

“We’re in a global recession. Every country and every industry is suffering, and one of the main reasons we’re in this is because of the failed policies of the past, including Republican policies,” Ritter spokesman Evan Dreyer told The Colorado Independent on Wednesday, referring to McInnis’s stint in Congress from 1992 to 2004.

Dreyer said the sharp drop in the commodity price because of dramatically decreased industrial demand has put the natural gas industry in a tailspin word-wide.

“Those [factors] have nothing to do with the fact that this state needed to modernize the rules and regulations around drilling, so the more anyone tries to make an argument that the rules are somehow to blame for the decline in drilling activity, it’s an overreach, it’s completely untrue, and people are seeing it for what it is, which is political opportunism,” Dreyer said.

In fact, Ritter has staked out some political ground that’s shaky for a Democrat trying to appease a liberal base clearly concerned about the impacts to air and water quality and wildlife habitat stemming from the state’s most recent gas boom.

The governor does not support federal oversight of a common gas-drilling process known as hydraulic fracturing without more study of its potential impacts to groundwater supplies. But a recent poll showed two-thirds of the registered voters surveyed in the 3rd Congressional District, encompassing most of the state’s Western Slope, do support the so-called FRAC Act.

“We need more data and scientific study before we enact federal legislation on top of what we believe are very responsible [new state] rules that address that very issue, and as data comes in and studies are conducted, that’s when we can make some responsible decisions,” Dreyer said.

Even McInnis has previously admitted some level of change was needed in order to “tighten up” drilling regulations to better protect the environment, but he told The Colorado Independent last year that Ritter and Democratic state lawmakers went too far at a time of economic uncertainty.

“On top of that you’ve got a governor that is very insistent on rules and regulations that seem to be punitive in their nature,” McInnis said. “I don’t mind you tighten it up, and I think we should absolutely insist on best practices, but there’s a difference between best practices and no practice.”

Dreyer fired back that McInnis is not in tune with the current mindset among Colorado voters who favor environmental protection over increased energy production.

“The people of this state, when [Ritter] was campaigning three and four years ago, made it very clear that the record levels of drilling in this state were causing impacts to our environment, to our water, to wildlife, to our communities, and these new rules modernize how that development occurs so that it does occur in a way that’s balanced and responsible and leads to a healthy industry and healthy communities,” Dreyer said.

He then cited recent administration efforts to increase pipeline capacity, expand natural gas as a baseload electricity generator, step up its use as a transportation fuel and get Congress to implement tax credits and other natural gas projects at the national level.

“[Ritter] is working extremely hard to increase demand and create new markets for natural gas,” said Dreyer, pointing to the governor’s support for natural gas as a cleaner-burning bridge fuel in the New Energy Economy that’s based on renewable-energy expansion. Again, McInnis in previous interviews has supported clean energy projects and Ritter’s New Energy Economy as well.

“Of course what the governor is saying is absolutely right,” he told TCI last year. “The reality is new energy is the future, not just for Colorado but for the whole world and we’ve got to do it, but on the other hand the statement that we should do it at the exclusion of the current resources that we have, including coal, isn’t right.”

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