GARY GARRISON
RESEARCH ASSIGNMENT
ENERGY REGULATION
JULY 9. 1981
PROFESSOR AHRENS
FUTURE DEVELOPMENT OF TAR SANDSPROBLEMS AND ATTEMPTED SOLUTIONS
"Tar sand is a bituminous (oil impregnated) sand
and constitutes the largest known non-fluid petroleum
resource in the United States." 1 • While coal and oil
shale contain vastly greater energy reserves, they are
not considered to be a petroleum resource. Tar sands
have been found on every continent except Australia
and Antarctica, and are found in twenty two states in
the United States, including New Mexico, Texas, California,
Kentucky and Utah. "The estimated total domestic tar sand
resources range from fifteen to thirty billion barrels
of oil." 2 • Of this fifteen to thirty billion barrels of
estimated reserves, ninety per cent of the reserves occur
in the state of Utah, * The majority of the tar sands
located in Utah are on federal lands, and are either
under the control of the Department of the Interior, or
the Department of Agriculture.
The largest single deposit of tar sands in North
America is located in Alberta, Canada. The Athabaska tar
sands are located in the northern part of the province,
and estimated reserves of oil in this field range up to
*
See color coded map enclosed at end of paper.
2.
a trillion barrels. Most of the technology used to
recover tar sand was developed on this site, and some
commercial production of this resource has been achieved
in Canada. Tar sand resources in the United States are
dwarfed in comparison with the Canadian reserves of this
oil resource. Because of the size of the Canadian tar
sand reserves, and the future potential for development
and production of oil from the Alberta fields, it is
easy to see why the Canadians are ahead of the United
States in the development and production of this fuel
resource.
Oil can be recovered from tar sand by two basic
processes. The first process, and by far the least
imaginative, is to remove the tar sand by surface
mining, e.g., strip mining. After the tar sand is removed
from the ground, the oil is then extracted by the use of
hot water or solvents. The second method used is to
remove the oil from the tar sand deposits by in-situ
methods such as using a combination of heat, steam
injection, or solvents to free the oil and permit its
recovery without destr9ying the surface of the land.
Other more exotic methods of extraction are being developed,
but as yet are unproven.
Because most of the reserves of United States tar
sands are located in Utah, and are subject to federal
control, this paper will deal mainly with the existing
ooono
J.
problems in leasing land from the federal government,
under the Mineral Leasing Act.J• The original Mineral
4
Leasing Act • was drafted primarily to facilitate the
leasing of federal lands for the production of oil,
coal, and natural gas. At the time the original legislation was drafted in 1920, oil, coal, and natural gas
were our principal forms of primary energy as they still
are today, and the import of the legislation was to aid
in the leasing and development of these principal resources.
The 1920 act was described as "an act to promote the mining
of coal, phosphate, oil, oil shale, gas and sodium on the
public domain ... 5· Tar sands were not included in the act
and were not specifically provided for until an amendment
to the 1920 act was passed forty years later. The amendment
to the 1920 act was called the Mineral Leasing Act Revision
of
196o, 6 · and provided for the leasing of federal lands
for "native asphalt, solid and semisolid bitumen, and
bituminous rock (including oil impregnated rock or sands
from which oil is recoverable only by special treatment
after the deposit is mined or quarried) ... ?.
The language used in the 1960 amendment has created
a great deal of confusion both to potential leaseholders
and the Department of the Interior who would issue the
leases for future
develop~ent
of United States tar sands.
Under the present law, oil and gas leases are issued under
section 17 of the leasing act, and tar sand leases fall
Ooo r;,.··
_,
.....
.I
4.
under section 21 of the leasing act. These sections are
mutually exclusive, that is, if you held a section 21
tar sand lease, and drilled a test well and struck oil,
technically the oil would not belong to you, and if you
held a section 17 lease which is issued for oil and gas,
and happened to discover a deposit of tar sands on your
lease this also would not belong to you.
"In interpreting the present law, the
Department of the Interior has been
~n14llins; as a result of the lack of
a clear distinction between the two
chief classes of hydrocarbons, i.e.,
oil and gas leases under section 17
and tar sand leases under section 21
of the Mineral Leasing Act to issue
tar sand leases •••• While a few section
21 (asphalt) leases were issued by the
department in 1933-1965, which are still
outstanding but without production, no
additional leases have been issued due
to the technical problems involved in
differentiating between oil and gas
and tar sand."8.
The result of this confusion over a poorly written
piece of legislation has been what amounts to a fifteen
year moratorium on the issuance of section 21 tar sand
leases by the Department of the Interior. This moratorium
on tar sand leases was not lifted by the department until
late in 1980, and then only because of Congressional
pressure.
Under the present leasing act, two separate hydrocarbon leases could be issued for the same piece of
property which could easily lead to conflicting interests.
00098
5.
One leaseholder could be issued an oil and gas lease
under section 17, and another leaseholder could be issued
a tar sands lease under section 21. "A conflict can arise
when different lessees apply for permits to develop under
systems that are not compatible as to timing and technology (e.g., conventional oil and gas drilling and
strip mining of tar sands) ... 9. Because of this possible
conflict of interest, there is a need for a combined
hydrocarbon lease, one that would combine an oil and
gas lease with other hydrocarbons on a single lease.
The combined hydrocarbon lease would eliminate the
possibility of a conflict over what mineral will be
developed and eliminate the potential problem of waste,
and "a single lessee under a combined hydrocarbon lease
would ensure proper development of the tract to maximize
hydrocarbon recovery." 10 • Besides the need for a combined
hydrocarbon lease, there are other problems that need to
be resolved before any efficient development of tar
sands can occur. The terms of oil and gas leases under
section 17, and tar sand leases under section 21 are at
present very similar. Both oil and gas leases and tar
sand leases are leases by competitive bid only. Because
of the special problems associated with production of
tar sands e.g., large capital outlay and the uncertainty
as to the quantity that can be commercially produced,
there should be special incentives provided to encourage
6.
investment in tar sand leases. In addition to the combined
hydrocarbon lease the Department of Energy listed four
other objectives that any proposed legislation on tar
sands should include. These objectives are:
1. "Provide for orderly conversion of
existing leases to combined hydrocarbon leases that will include
tar sands.
2. Allow the offering of leases large
enough to allow economic development.
3. Provide primary lease terms of sufficient duration to allow for planning
and initiating production.
4. Grant power to waive, suspend or reduce
royalties when there is evidence that
established royalty rates would discourage
development or would be likely to reduce
recovery rates."ll.
A legislative effort to accomplish the goals of
the Department of Energy, and to encourage the production
of oil from tar sands was introduced in the 96th Congress
by Representatives McKay, Udall, Santini and Marriott.
House Bill 7242, 12 • '".and· . its companionl.bill in the upper
house, Senate Bill 2717, 1 3•sponsored by Senator Frank
Church, are bills that are identical in content and
purpose. Each of these bills incorporates features that
would remove the confusing aspects of the present mineral
leasing act that have hindered the Department of the
Interior in their efforts to issue new tar sand
lease~.
Additionally these bills incorporate the features that
the Department of Energy believes are necessary to
encourage tar sand development and future commercial
production. Since the bills are identical in content
7.
in analyzing the legislation the writer will refer to the
bills as a single piece of legislation, without reference
to either the House or Senate Bill number.
The bill, when read alone is very difficult to
understand. When read with the applicable sections of
the mineral leasing act with the proper words added and
deleted, it is possible to understand the scope of the
bill and the changes the passage of the bill would bring
about. Basically the bill addresses seven main points.
The first major change the bill would bring about would
be to establish a combined hydrocarbon lease that would
include all hydrocarbons in one lease with the notable
exceptions of gilsonite and oil shale which would remain
in the section 21 lease, and coal which would continue to
be leased under section 2 of the leasing act. This part of
the bill allows oil, gas and tar sands to be included in one
lease instead of the two lease system that was created
under the present mineral lease law. By grouping these
hydrocarbons together the bill eliminates the confusion
in the Department of the Interior, or at least the
confusion associated with the leasing of tar sands,
and at the same time promotes future exploration of
tar sand by linking it with oil and gas leases. The
second major feature of the bill allows the Secretary
of the Interior, upon proper application to convert
existing oil and gas leases into converted leases that
8.
will include tar sands. This aspect of the bill will
encourage new exploration for tar sands on existing oil
and gas leases, and at the same time will not penalize
existing leaseholders for acquiring their leases before
the passage of this legislation. The third change that
the bill would bring about would be to enlarge the current
competitive lease acreage size from the 640 acre.maximum
per lease under the present mineral lease law to a
maximum of 5120 acres per lease with the Secretary of
the Interior having the discretion to "establish a lower
aggregate limitation for leases in areas known to contain
deposits of tar sand." 14 • This aspect of the bill gives
the secretary the flexibility to lease in large or small
acreage amounts depending on the probability of the
occurrence of tar sands in a given area. If there are
known rich deposits in an area the secretary could lease
an area as small as 640 acres, or if there is an area where
the presence of tar sand is unknown or the deposit is
undefined the secretary can lease up to 5120 acres for
a single lease unit.
The fourth feature of the legislation would permit
extensions on initial leases of tar sands. The primary
term at present for tar sand leases is for a period of
five years. Now, under the proposed legislation, the
lessee can apply to the Secretary of the Interior for
an extension beyond the primary term for a period of
three to five years. To get this extension the lessee must
submit "an acceptable plan of operations leading toward
commercial recovery of hydrocarbon resources at depths
of less than three thousand feet or by use of enhanced
(tertiary) recovery methods ... l5. This function of the
bill allows a lessee several years to research and develop
a plan for commercial production without the worry of
losing his lease because of inactivity at the end of the
primary five year term.
The fifth change that the tar sand bill authorizes
is the discretionary measure given to the Secretary of
the Interior to suspend the payment of royalties on tar
sand leases "for a period of not less than three and not
to exceed five years ••• on new oil which is produced under
a new combined hydrocarbon lease using enhanced recovery
methods or surface mining." 16 • The purpose of this portion
of the bill is twofold, first to stimulate production, and
second to assure the lessee that he will get a fair return
on his investment if he actively pursues production of tar
sand petroleum.
The sixth point that the bill addresses is a disclaimer
as to the tax consequences for a converted lease that
includes tar sands. Tar sands, under the Crude Oil Windfall
Profit Tax Act of 1980, 1 7· are specifically exempted from
taxation under the act. Although oil produced from
conventional methods under the combined hydrocarbon lease
10.
would still be taxable, any petroleum produced from tar
sand deposits would be exempt from taxation under the
Windfall Profits Tax Act. This is clearly an incentive
offered by Congress to encourage production of tar sands.
The last section of the bill contains a statement
that no land in the national parks system will be leased
except as authorized by law and according to plans of
the Park Service.
The bill as a whole would seem to offer something
to everyone involved in the leasing of tar sand resources.
The legislation offers incentives for production, tax
advantages, suspended or reduced royalty payments, and
a~combined
hydrocarbon lease. The bill gives away a lot,
and doesn't seem to keep very much. In a sense it seems to
say
~we
want you to develop the resource and we don't care
if we don't make much money off the deal." In the House
hearings on the bill, the Committee on Interior and
Insular Affairs said in a prepared statement, "that in
view of our critical dependence on foreign oil imports,
the development of this new energy source is of utmost
importance and that maximum monetary return may be of
.
.
.
lesser 1mportance
than max1mum
resource d eve 1 opmen t • .. lB.
The bill did pass in the House of Representatives,
but was later killed in the Senate because of inaction.
In all of the hearings on the bill, there was very little
opposition to the legislation. The major oil companies
0010~
~
11.
did not actively oppose the bill, and environmental groups
were barely visible at the hearings. If in the event that
strip mining of the tar sand leases ever became an actuality,
this writer is inclined to believe that opposition from
environmental groups would become a great deal more active
and vocal, and would follow the usual course of delaying
tactics and injunctions.
Since the opposition to the bill
did not come from these two groups, there is really no other
logical reason for the bill dying in the Senate than the
terms of the bill itself.
As I have stated earlier, perhaps
the bill gave away too much and kept too little.
At this point any and all reasons that the writer could
offer for the death of the bill in the Senate is purely a
matter of conjecture.
A new bill has been introduced in the current legislative
session of Congress to accomplish what the old bill failed
to do, which is to pass the Senate.
Upon receipt of this
bill which is being sent to the writer by way of the office
of Congressman Kent Hance, it will be turned over to Professor
Ahrens along with a copy of the now dead bill for future
comparison and analysis.
The bottom line on tar sand is that it will probably
not be developed to its fullest capacit¥ until the major
oil companies develop
technology to get the product out
of the ground cheaply.
As long as the oil companies have an adequate supply of
12.
oil, coal, and natural gas, and can produce these energy
sources cheaply with existing equipment and technology,
they will do so. This is not to say that the major oil
companies will not buy up leases and do research in the
area of tar sand development for commercial production
in the future, for it is only logical that they do so.
Realistically, the development of tar sands will occur
in the not too distant future, but when tar sands are
finally fully developed, it will probably be after the
development of more plentiful resources such as oil shale.
0{~106
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FOOTNOTES
1.
u.s.
Congress. House of Representatives. Committee
on Interior and Insular Affairs. Facilitating and
Encoura in the Production of Oil from Tar Sands
and Other Hydrocarbon Deposits. 9th Cong., 2d Sess.
Rept. 1161. Washington, D.C. u.s. Government Printing
Office, 1980, p. 3.
2, Id
3· JO U.S.C. 241
4. 41 Stat. 4)7. An Act to Promote the Mining of Coal,
Phosphate, Oil, Oil Shale, Gas and Sodium on the
Public Domain.
5. Id
6. 74 Stat. 781. Mineral Leasing Act Revision of 1960.
7. Id at 790.
8. U.s • ·eongress •· House., o~ Repres-entatives. Committee
on Interior and Insular Affairs: Facilitating and
Encouraging the Production of Oil From Tar Sands
and other Hydrocarbon Deposits. 96th Cong., 2d Sess.
Rept. 1161. Washington D.C. u.s. Government Printing
Office, 1980, p. 4.
9.
u.s.
Congress. United States Senate. Committee on
Energy and Natural Resources. Production of Oil From
Tar Sand and Other Hydrocarbon Deposits. 96th Cong.,
2d Sess., Washington, D.C., u.s. Government Printing
Office, 1980, p. 55.
10. Id
11. Id at
12.
p.56.
u.s.
House of Representatives. To Facilitate and
Encourage the Production of Oil From Tar Sands and
Other ~drocarbon Deposits. 96th Cong,, 2d Sess.
H.R. 72 2. Washington, D.C. u.s. Government Printing
Office, 1980, 4 p.
1 J. U.S. Congress. Senate. To Facilitate and Encourage the
Production of Oil From Tar Sand and Other Hydrocarbon
Deposits. 96th Cong., 2d Sess. s. 2717. Washington, D.C.
U.S. Government Printing Office, 1980, 4 p.
00108
15.
FOOTNOTES CONT'D.
14. Id at p. 4.
15. Id at p. J.
16. Id at J-4.
u.s.c. 4986.
u.s. Congress. House
17. 26
18.
of Representatives. Committee
on Interior and Insular Affairs. Facilitating and
Encouraging the Production of Oil From Tar Sands
and Other Hydrocarbon Deposits. 96th Cong., 2d Sess.
Rept. 1161. Washington, D.C. u.s. Government Printing
Office, 1980. p. 7.
1).
FOOTNOTES CONT'D.
14. Id at p. 4.
15. Id at p. ).
16. Id at J-4.
u.s.c. 4986.
u.s. Congress. House
17. 26
18.
of Representatives. Committee
on Interior and Insular Affairs. Facilitating and
Encouraging the Production of Oil From Tar Sands
and Other Hydrocarbon Deposits. 96th Cong., 2d Sess.
Rept. 1161. Washington, D.C. u.s. Government Printing
Office, 1980. p. 7 •
... ·,
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•
00,1',. ,. . v,_.
{\1"1
I
96TH
CONGRESS
2D SESSION
H• R• 7242
.
To facilitate and encourage the production of oil from tar sand and other
hydrocarbon deposits.
IN THE HOUSE OF REPRESENTATIVES
i
I
MAY 1, 1980
Mr. McKAY (for himself, Mr. UDALL, Mr. SANTINI, and Mr. MARRIOTT) introduced the following bill; which was referred to the Committee on Interior
and Insular Affairs
A BILL
To facilitate and encourage the production of oil from tar sand
and other hydrocarbon deposits.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That (a)(1) section 1 (30 TJ.S.a. 181), sections 21 (a) and (c)
4 (30
u.s.a.
241 (a) and (c)), and section 34 (30
u.s.a.
182)
5 of the Mineral Lands Leasing Act of 1920, as amended, are
6 amended by deleting "native asphalt, solid and semisolid bi7 tumen, and bituminous rock (including oil-impregnated rock
8 or sands from which oil is recoverable only by special treat-
•
9 ment after the deposit is mined or quarried)" and by inserting
.)
... .... . ..
00 1..,
.
..
2
1 in lieu thereof "gilsonite (including all vein'-type solid hydro2 carbons),", except that in the first sentence of section 21(a)
3 the word "and" should be inserted before "gilsonite."
4
(2) Section 27(k) of such Act (30 U.S.a. 184(k)) is
5 amended by deleting "native asphalt, solid and semisolid bi6 tumen, bituminous rock" and by inserting in lieu thereof "gil7· sonite (including all vein-type solid hydrocarbons),".
8
(3) Section 30 of such Act (30 U.S.a. 209) is amended
9 by inserting "gilsonite (including all vein-type solid hydrocar10 bons)," after "oil shale".
11
(b) Section 1 of such Act (30 U.S.a. 181) is further
12 amended by adding after the first paragraph the following
13 new paragraph:
14
"The term 'oil' shall embrace all nongaseous hydrocar-
15 bon substances other than those substances leasable as coal,
16 oil shale, or gilsonite (including all vein-type solid hydrocar17 bons).".
18
(c) Section 27(d)(1) of such Act (30 U.S.a. 184(d)(1)) is
19 amended by inserting before the period at the end of the first
20 sentence the following: ": Provided, however, That if the
21 Secretary determines that it is in the public interest, he may
22 establish a lower aggregate acreage limitation for leases in
23 areas known to contain deposits of tar sand.".
24
(d)(1) Section 17(b) of such Act (30 U.s.a. 226(b)) is
'\
25 amended by inserting after "gas field," "or in areas known to
001~·~
........ - ··"•
3
-1 contain deposits of tar sand," and by inserting 'after "six hun2 dred and forty acres," "unless the Secretary finds in those
3 areas known to contain deposits of tar sand that a larger area
4 is necessary to comprise a reasonable economic unit,".
5
(2) Section 17(c) of such Act (30 U.S.C. 226(c)) is
6 amended by deleting "within any known geological structure
7 of a producing oil or gas field,'' and inserting in lieu thereof
8 "subject to leasing under subsection (b),".
9
(e) Section 17(e) of such Act (30 U.S.C. 226(e)) is
10 amended by inserting before the period at the end of the
11 paragraph the following: ": Provided, however, That the Sec12 rotary shall extend a lease for not less than three years
13 beyond its primary term in areas known to contain deposits
14 of tar sand where the lessee or his assignee submits, before
15 the end of the primary term, an acceptable plan of operations
16 leading toward commercial recovery of hydrocarbon re17 sources at depths of less than three thousand feet or by use of
18 enhanced (tertiary) recovery methods".
19
(0 Section 39 of such Act (30 U.S.C. 209) is amended
20 by adding the following new paragraph:
21
"In areas known to contain tar sand, that for a period of
22 not less than three years and not to exceed five years, the
23 Secretary shall suspend the payment of royalties on new oil
24 which is produced under a new combined hydrocarboy lease
4
1 using enhanced .recovery methods of development or surface
·.
''
. . ..
2 .mmmg
3
SEc. 2. (a) Section 2 of the Mineral Leasing Act for
4 Acquired Lands (30 U.S.a. 351) is amended by adding at the
5 end thereof: "The term 'oil' shall embrace all nongaseous
6 hydrocarbon substances other than those leasable as coal, oil
.7 shale or gilsonite (including all vein-type solid hydrocar8 bons). ".
9
(b)
Section 3 of such Act (30 U.S.a. 352) is amended by
10 inserting "gilsonite (including all vein-type solid hydrocar11 bons)," after "oil shale".
12
SEc. 3. Except as provided in this section, nothing in
13 this Act shall be construed to diminish or increase the rights
14 of any lessee under any oil or gas lease issued under section
15 17 of the Mineral Lands Leasing Act of 1920 or section 3 of
16 the Mineral Leasing Act for Acquired Lands. The owner of
17 an oil and gas lease issued before the date of enactment of
18 this Act may apply to the Secretary to convert the lease to a
19 new combined hydrocarbon lease. Such conversion shall take
20 place upon such conditions as may be imposed by the Secre21 tary including an acceptable plan of operations submitted by
22 the lessee or his assignee, which assures diligent develop23 ment of those resources requiring enhanced recovery methods
'
'
2~ . of development or surface mining, conditions relative to
•
•
25 . methods of mining, and such royalties as shall be specified in
Ilk
the converted lease.
.
r0..~-·l'\
.
96TH· CONGRESS
2D SESSION
s• 2717
To facilitate and encourage the production of oil from tar sand and other
hydrocarbon desposits.
IN THE SENATE OF TilE UNITED STATES
MAY 15 (legislative day, JANUARY 3), 1980
Mr. CHURCH introduced the following bill; which was read twice and referred to
the Committee on Energy and Natural Resources
A BILL
To facilitate and encourage the production of oil from tar sand
and other hydrocarbon desposits.
1
Be it enacted by the Senate and House of Representa-
2 lives of the United Stales of America in Congress assembled,
3 That (a)(1) section 1 (30 U.S.a. 181), sections 21 (a) and (c)
4 (30
u.s.a.
241 (a) and (c)), and section 34 (30
u.s.a.
182)
5 of the Mineral Lands Leasing Act of 1920, as a1nended, are
6 amended by deleting "native asphalt, solid and semisolid bi7 tumen, and bituminous rock (including oil-i1npregnated rock
8 or sands from "\vhich oil is recoverable only by spccial.treat\
9 ment after the deposit is mined or quarried)'' and by inserting
I
2
1 in 1ieu thereof "gilsonite (including all vein-type solid hydro2 carbons),", except that in the first sentence of section 21(a.)
3 the \Vord "and" should be inserted before "gilsonite."
(2) Section 27(k) of sueh Aet (30 U.S.C. 184(k)) is
4
5 an1ended by deleting "native asphalt, solid and smnisolid bi-
G tum en, bitun1inous roek" and by inserting in lieu thereof "gil7 sonite (including all vein-type solid hydrocarbons),".
(3) Section 30 of such Act (30 U.S.C. 209) is an1ended
8
9 by inserting "gilsonite (including all vein-type solid hyclrocar10 bons)," after "oil shale".
(b) Section ,1 of such Act (30 U.S.O. 181) is further
11
12 an1ended by adding · after the first pa.ragraph the follo\ving
13 ne\v paragraph:
14
"The tern1 'oil' shall embrace all nongaseous hydrocar-
15 bon substanees other than those subshn1ces leasable as coal,
16 oil shale, or gilsonite (including all vein-type solid hydroca.r17 bons). ".
18
(c) Section 27(d)(l) of such Act (30 U.S.C. 184(d)(1)) is
19 a1nended hy inserting before the period nt the encl of_ the first
20 sentence
~he
follo\ving: ": Provided, hozvever, That if the
21 Se.c retary determines that it is in the public interest, he n1ay
'
!
22 establish a lower aggregate acreage lin1itation for leases in
23 · areas
24
·
kno~
to contain deposits of tar sand.''.
(d)(l) Section
j~5· · amended
i 7(b)
of such Act (30 lT.S.C. 2260J)) is
bylije.rting uga.s f~eld," "or in areas kno\vn to con-
~·
1'!5
UO..a.
3
1 tain deposits of tar sand," and by inserting after "six hundred
2 and forty acres," "unless the Secretary finds in those areas
3 kno\vn to contain deposits of tar sand that a larger area is
4 necessary to corn prise a reasonable economic unit,".
5
(2) Section 17(c) of such Act (30 lT.S.C. 22G(e)) 1s
6 arn.endcd by deleting- "y-.rithin any kno\vn geological structure
7 of a producing oil or gas field,'' and inserting in lieu thereof
.
. uncl er suoscct1on
,
. (b) , " .
8 " su lJJCCt
to l cas1ng
9
(e) Section 17(e) of such Act (30 1J.S.C. 22G(e)) is
1Q an1ended by inserting before the period at the end of the
l l paragraph the follo\ving: '': PTovided, however, That the Sec-
12 retary shall extend a lease for not less than three years
13 beyond its prin1ary tenn in areas kn0\\'11 to contain deposits
14 of tar
s~tncl
·where the lessee or his assignee sutnnits, before
1.5 the end of the prin1ary tenn, an acccptr;,hlc plan of operations
16 lea.ding to·ward conunereial recovery of hydrocarbon re17 sources at depths of less tha.n three thousand feet or by use of
18 enhanced (tertiary) recovery 1ncthods".
19
(f) Section 39 of such Act (30 U.S~C. 20D) is an1cnded
20 by adding the follo·wing ne'v pa.ra.graph:
21
1
'In areas kno\vn to contain tar sand, that for a period of
22 not less than three years and not to exceed five years, the
23 Secretary shall suspend the payn1ent of royalties on nev/ oil
24 which is produced under a ne\v co1nbinecl hydrocarbon lense
001!6
J usmg enhanced recovery n1cthods of dcvelop1n cnt or surfr:.C0
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(b) Section 3 of suc.h A.et (30 TJ .S.C. 352) is :~ rnendccl by
9
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SEc. 3. Except as provided
12
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21 tary including an acceptable plan of operations n ll nni rtccl bY
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23 ment of those resources ~: eo uirinr,· enhanced
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24 of ceve op1ncnt or sun:1cc n11n1ng,
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25 n1ethods of 1nining: and such royr:.ltics as shali lw specified in
26 the converted lease.