The U.S. Bureau of Land Management (BLM) Friday recommended that substantially smaller than originally proposed tract of public land be made available for oil shale and tar sand oil development and research, under a new draft environmental impact statement.

Under the BLM's new draft report, the agency could open up 461,965 acres of public lands for researching ways in which oil shale can be extracted from the ground without hurting the environment. Another 91,045 acres in Utah will be opened for tar sands research. The goal will be to prove that extracting both minerals can be done successfully and be commercialized.

Originally, the BLM in 2008 considered making up to 2.4 million acres available for commercial oil leasing in parts of Utah, Colorado and Wyoming. The BLM was sued by environmental groups in 2009, and has since reviewed its original proposal.

Because there are still many unanswered questions about the technology, water use, and impacts of potential commercial-scale oil shale development, we are proposing a prudent and orderly approach that could facilitate significant improvements to technology needed for commercial-scale activity, said BLM Director Bob Abbey. If oil shale is to be viable on a commercial scale, we must take a common-sense approach that encourages research and development first.

The new report is open to public comment for 90 days, at the end of which, the BLM will incorporate most substantive comments, including comments made regarding lands with endangered species, into the final impact statement.

Oil Shale Differs from Shale Oil

Oil shale must not be confused with shale oil -- where oil deposits are located deep underground in rock formations. Oil shale are rocks that have not been deposited deep enough and thus have not been fully turned into oil. The rocks are kerogen-rich, which then have to be heated to 750 degrees in order to convert the kerogen into oil, said Megan Crandall, a spokeswoman with the BLM.

Once a company can successfully prove the commercial development of the resource, a company's research lease can be converted into a commercial well.

So far, three companies including ExxonMobil have pending research lease permits with the BLM, Crandall said.

The announcement comes as the American Petroleum Institute, the country's leading energy trade group, is pushing hard for domestic energy development.

Within a week of encouraging an 'all of the above' energy strategy the administration continues to introduce actions that delay and restrict development, said API Spokesman Reid Porter. There has to be certainty, and the BLM draft plan is not conducive to an operating environment that encourages investment. The Administration is continuing actions that send negative signals to industry and capital markets at exactly the wrong time for the American public.

Ted Zukowski, an attorney with Earth Justice, a non-profit public interest law firm which helped sue the BLM in 2009, said the new proposal will have to be examined, but appears to be moving the tar sands and oil shale debate in the right direction.

Zukowski said the revised proposal is one of several alternatives, one of which keeps the original 2008 proposal in place.

The preferred alternative would limit the area where commercial oil leasing would take place, Zukowski said, who added the draft study is a balanced approach.