America’s Untapped Oil

Twenty-six years later, with gas at more than $4 a gallon, oil-shale prospectors think it can still work. Most eyes are on Royal Dutch Shell's "in situ" process. The company's idea is to heat oil shale underground to temperatures of about 700 degrees for three years or longer. In turn, the oil oozes out of the rock and can then be extracted. To avoid contaminating underground water, areas surrounding the heated rock are frozen to create "freeze walls", theoretically preventing the oil from migrating. "We have demonstrated that our technology works. We have produced oil and gas," says Terry O'Connor, vice president external and regulatory affairs for Shell Exploration and Production Company, Unconventional Oil.

In all, O'Connor says, the company has produced only 1,800 barrels, and, won't commercially produce for another 10 years at least. "Our challenge now is whether we can do it on a larger, commercial basis," adding Shell has yet to prove groundwater can be protected. "If we are not able to do that, I can assure you that we will not proceed to commercialization." When will Shell decide? Says O'Connor: "We hope to have enough knowledge by 2009 or 2010."

Still, Shell and other players, like Chevron, Exxon and a handful of oil-shale prospecting companies, want some answers now. Companies researching oil shale have been relegated to testing on privately-owned land or a few specially-leased plots on federal land. The reason? While the Federal Energy Policy Act of 2005 directed the Bureau of Land Management--which manages 80 percent of the oil-shale territory--to begin paving the way for commercial production, a 2007 environmentally-concerned Congress narrowly voted to put a one-year moratorium on developing commercial regulations, a restriction that expires on October 1. "We need a little more certainty the industry will be supported," says Vawter, who argues the moratorium should not be renewed. Shell's O'Connor says without any federal direction, it could have a "chilling effect" on the company's desire to continue investments.

Environmentalists, meanwhile, are taking a cautious line. They voice concern about the impact extraction would have on water quality. Some also worry that the production of oil shale could release greenhouse gases, though the oil companies say that is not a proven side effect. But even the most vocal environmental critics seem wary of being painted as anti-development in the current climate-especially since the energy industry is so vital to the local economy. "Across the board you have people who remember the Black Sunday event," says Frank Smith, the oil shale community organizer for the Western Colorado Congress. "This issue still resonates in their minds and souls."

Last month, Colorado's Governor Bill Ritter testified in Congress he wants to preserve the moratorium, a position supported by Wyoming's Democratic governor, Dave Freudenthal. Soon after, and just across the state border from the Royal Dutch Shell plant, Utah's Republican governor, Jon Huntsman Jr., and the state's two Republican senators, Bob Bennett and Orrin Hatch, called publicly for an end to the moratorium.

The heart of Colorado's oil shale country was once a Republican stronghold, in a loyal red state. No longer. Colorado is a key 2008 swing state, and four years ago the residents of oil shale country elected John Salazar, a Democrat, to the House. "He won because he defended the Western Slope's water," says Kenneth Bickers, professor of political science and the department chair at the University of Colorado, Boulder. In fact, in 2007, Salazar, along with his brother, Colorado Democratic Sen. Ken Salazar and Democratic Rep. Mark Udall, sponsored the efforts that led to the current oil-shale moratorium. Udall is today the Democratic candidate for an open Colorado Senate seat, in a tight race with former oil executive, Bob Schaffer. It's anybody's guess at this point whether the Bush administration's push to end the moratorium will help-or hurt-Republicans in down-ticket contests this fall.