'Rules of the road' set for oil shale drilling

[Terri]

By DINA CAPPIELLO
Associated Press
November 18, 2008

WASHINGTON (AP) -- The Bush administration gave energy companies steep discounts in the royalties they will be required to pay as it established the groundwork Monday for commercial oil shale development on federal land.

Interior Department officials said the 5 percent royalty rate during the first five years of production was needed to spur drilling while still giving taxpayers a fair return. But that rate is much lower than the 12.5 percent to 18.8 percent the government collects from companies harvesting conventional oil and gas on public lands.

"In the short run, the American economy will continue to rely on oil and that means we need to increase supplies particularly here at home," said Stephen Allred, Assistant Secretary of Land and Minerals Management, during a call with reporters. "Public lands have a significant role to play."

More