A Colorado parcel may bring forth next energy boom

MAHOGANY TEST SITE, Colo. -- Tucked into a ravine, and hidden behind ridges standing like stony sentinels, is the site of Shell Oil Co.'s experimental, highly anticipated 30-year project to unlock oil from vast underground beds of rock.

Here, on this sweeping plateau in western Colorado, the Bush administration has fixed its hopes for a long-mentioned energy boom: oil shale, which the US Department of the Interior praises as an ''energy resource with staggering potential." Members of Congress have described the region as the Saudi Arabia of oil shale.

Legislation recently signed by President Bush instructs the Interior Department to lease 35 percent of the federal government's oil shale lands within the next year, provides tax breaks to the industry, reduces the ability of local communities to influence where projects are located, and compresses lengthy environmental assessments into a single analysis that would serve for 10 years.

Oil shale is rock that, left alone, would require millions of years of natural heating to produce oil. Modern techniques accelerate that process by cooking underground rock.

But some specialists warn that the process could use more energy than it yields. And conservationists, and many local residents point to the massive amounts of water it will consume and to the disturbances to land, wildlife habitat and the lives of rural people.

Residents wonder how oil shale excavations, which can be massive, will affect the half-million-acre basin that supports one of North America's largest migratory deer herds, prized elk habitat, and more than 350 species of animals. They also ponder how industrialization and growth might play out in the largely rural landscape of Rio Blanco County, which has a population of 6,000, about 250 miles west of Denver.

''I don't like it," said Scott Brynildson, a rancher who also owns a plumbing company. ''It's not why I live here. If I want all those people, I'd live in Denver. I wanted to raise my kids in a small town."

Most of this area is ranchland with more sheep than people, its livestock herds ranging across rolling hills studded with cedar and stands of Douglas fir. But the Piceance Basin, as the region is known to geologists, is also a mineral storehouse where companies have leased public land to get at significant deposits of coal, natural gas, oil and oil shale.

By Shell's reckoning, the denser oil shale formations could produce a billion barrels of oil per square mile. Those projections are debated, but if the Green River Formation produces as predicted, it would amount to eight times the oil reserves in Saudi Arabia.

Terry O'Connor, Shell's vice president of external and regulatory affairs, said the company would decide by 2010 whether to pursue commercial production. But, he said, there was little doubt about the region's potential. ''We think this is the place and this is the method," he said.

Record oil prices and increasing scarcity have spurred renewed interest in exploration in the region, and improving technology has sparked optimism that oil shale's time has come.

The federal government has begun leasing land for oil shale production. Ten new research and development leases are being processed by the Bureau of Land Management in Colorado. Others have been awarded on federal land in Utah and Wyoming.

According to the Bureau of Land Management, the oil shale leasing will take place in the same areas where drilling for natural gas has been expanding. If all the leases produce, the area would be transformed into a highly industrialized zone with a network of roads, pipelines, rail lines, and power plants to service the gas fields, oil shale heating sites, and oil shale mines.

The speed at which oil shale is being promoted is disturbing to US Representative Mark Udall, Democrat of Colorado. ''Mandating leases for that much land, that fast, risks putting a big part of northwestern Colorado on the fast track to becoming a national sacrifice zone," Udall said last month.

Udall is the son of the late Morris Udall, a Democratic member of Congress from Arizona, and a nephew of former secretary of the interior Stewart Udall.

Largely because of the work of the elder Udalls, the family name tends to be synonymous with wilderness protection in the West.

O'Connor said Shell was seeking only the kind of assistance that government routinely offers to fledgling businesses. ''We need support, both from Congress and the states, not subsidies, but access to federal lands," O'Connor said.

Steve Smith of the Wilderness Society in Denver warned recently of oil shale's ''false hope, exaggerated claims, and unfulfilled promise."

Smith said that new technology notwithstanding, getting oil out of the ground was likely to consume unacceptable amounts of groundwater and place drinking water at risk for tens of thousands of people.

The process uses as much as three barrels of water for each barrel of oil produced. The Rand report notes that ''all high-grade Western oil shale resources lie in the Colorado River drainage," a source of supply for millions of people in the arid West.

O'Connor agreed that water issues were the thorniest problems for the company to resolve.

He also said, meanwhile, that Shell had purchased nearby water rights and would recycle as much groundwater as possible.