by Janet Krenn

Created on: February 27, 2009   Last Updated: March 14, 2009

Three times the oil in Saudi Arabia on one hand.

Untold water usage and pollution as well as questionable yield on the other hand.

Although the estimated 800 million barrels of recoverable shale oil is spread between three states (Utah, Wyoming, and Colorado), Colorado has become the setting of controversy. There, the shale oil is closest to the surface and likely the easiest to extract.

Although it sounds simple, the controversy over shale oil drilling in Colorado involves many players, opinions, and concerns.

Political Alignment of Planets

If you feel like the talk over whether to drill for shale oil in Colorado sprung up overnight, in some ways, it did. The controversy began as several points in history converged on October 31, 2008. Although global oil demand had already reached astronomical levels and gas prices in the U.S. skyrocketed, on this particular date, Congress allowed a moratorium on shale oil drilling to expire.

Even before the moratorium expired, members of Congress began to debate a new royalties structure to encourage oil shale drilling on public lands. Whereas companies drilling for gas and oil on public land pay 12.5% royalties, shale oil operations would pay 5% for each of the first five years, with an additional 1% each following year thereafter until reaching 12.5%.

With that, several oil companies began to set their sights on Colorado's Rocky Mountain region.

Ready or Not, Here We Drill

Although ready to drill, oil companies agree that current shale oil extraction technologies are not well-developed.

Shale oil is difficult to extract because it is tucked away in the pores of sedimentary rock. To get it out, the rock must be heated to the point that the oil vaporizes. This can be done by ex situ extraction (digging up the rock and essentially cooking it above the ground) or by a less destructive method, in situ extraction (heating the rock while it is still in the ground). Once extracted, the vapor is collected as condensate and refined into diesel or jet fuel.

Among the oil companies, Shell has completed the most development on shale oil in situ extraction, investing millions of dollars in research. In the Shell method, water gets injected into the ground and frozen. This forms a capsule that surrounds the soil and rock in a 20 to 30 foot thick ice bowl. Then, injection and extraction wells are dug. Hot fluids go into the injection wells and heat the soil to 700 degrees. The oil gets vaporized and moves through the extraction wells to the surface

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