Oil Shale Development

Report Outline
Oil Shale Lands and Public Policy
Legal Complications of Development
Technology of Oil Shale Mining

Oil Shale Lands and Public Policy

Policy Debate Over Vast Potential Riches

For the first time in four decades, the federal government on Dec. 20 will lease a part of its vast acreage in the Rocky Mountains for oil shale development. The stakes are immense for industry and the public. Government geologists estimate that up to two trillion barrels of oil lie encased in shale rock beneath 11 million acres in Colorado, Utah and Wyoming—an amount six times greater than all proved reserves of crude petroleum on earth. Seventy-two per cent of these lands, containing four-fifths of the oil, are federally owned.

The Department of the Interior, which administers the federal domain, concedes that it is moving cautiously to avoid any hint of “another Teapot Dome” scandal. The department's Bureau of Land Management office at Denver will accept competitive bids on three “test sites” totaling 11,458 acres. The leasing terms are intended to encourage a wide range of experimentation, which the department hopes will determine whether oil can be extracted from shale on a commercial basis. A number of experts believe that shale oil can be produced at costs low enough to compete on the American market. If they are right, the United States can stop worrying about its petroleum reserves. But the industry can begin worrying about oil's present price structure—of which the major props are import restrictions and a depletion allowance for tax purposes.

For these reasons and others, the oil industry has been accused of dragging its feet in the development of oil shale. Oil men can point out in their defense that the Rocky Mountain deposits have been known since 1869 but that no extraction technology has ever been proved profitable. A small research-minded company, the Oil Shale Corporation (Tosco), now claims to have perfected the technology and needs only financial backing to begin operations on a commercial scale.