Tomco Energy (NCS)- the next Cadence?

5.5 Strategic importance of US oil shale

The Directors believe that there are significant financial and political
pressures on the United States to reduce its current, and potentially future,
reliance on foreign sources of oil. The United States is currently a net
importer of oil, and the Directors expect concern over its reliance on foreign
sources to increase in the foreseeable future due to the growing demand for oil
within the US coupled with supply anxiety regarding the steady supply of oil to
the US from the Middle East. Furthermore, global oil supplies are widely thought
to have peaked, with the current annual consumption of crude oil exceeding the
rate at which new oil reserves are discovered at the approximate ratio of 3 to
1.

The Naval Petroleum and Oil Shale Reserves office of the US Department of Energy
was created by an Executive Order by President Taft in 1912 to oversee the US
strategic interests in oil shale. The NPOSR published a report in March 2004
entitled "Strategic Significance of America's Oil Shale Resource" which sets out
the strategic rationale for developing US oil shale resources. The report
proposed that an oil shale industry could be established in the US by 2011 with
an aggressive goal of achieving production of 2 million barrels per day by 2020.
Further to that report the NPOSR published a report entitled "America's Oil
Shale: A Roadmap for Federal Decision Making" in December 2004, which set out a
series of recommendations for the implementation of a programme for development
of the US oil shale resources. The report proposed federal actions to facilitate
and stimulate private industry for the development of the domestic oil shale
industry over a long period of time, comparable to the initiatives undertaken by
the Canadian government in the 1960s in respect of the Canadian tar sands
resources, which are currently yielding approximately 1 million barrels of crude
oil per day. The report also noted the potential future reliance of the US
military on the supply of oil shale, given the increasingly limited sources of
foreign oil coupled with the greater risk of supply disruptions due to political
instability.

Section 369 of the US Energy Act, which was put into effect on 8 August 2005,
established a national policy and directed specific programs to further develop
oil shale and oil sands. Under the guidance of the Energy Act the BLM, which
holds the leasing rights over approximately 80 per cent. of the land comprising
the Green River formation, invited proposals to lease small oil shale bearing
tracts for RD&D purposes, each of which includes a preferential right to later
convert the RD&D lease to a larger commercial lease conditional on the lessee
developing a commercially and environmentally viable approach. The Directors
believe that these actions form part of a strategic plan by the US government to
form private/public partnerships to exploit oil shale.