Years of rising energy demands have significantly depleted traditional and easily-acquired energy resources, even as large deposits of unconventional resources have remained undeveloped due to the high expense and complicated technology involved in extracting them. But with the price of crude oil and gasoline up and supply shrinking, nontraditional resources are being seriously considered as potential sources of fuel.

The price of crude oil jumped from $30 a barrel in 2000 to roughly $80 per barrel today, driven by increased demand, particularly in Asia. Demand for petroleum in China increased 41% from 2001 to 2005, according to a study authored by Alan Isaacson, research analyst with the Bureau of Economic and Business Research at the University of Utah. Even if the price of oil falls, growing demand from around the world means alternative sources of energy will still be necessary.

“People in the petroleum industry are not optimistic about finding any more large deposits,” Isaacson said. “Large industry will have to develop alternative resources.”

One of the most promising alternative sources of energy is oil shale. Oil shale is rock that contains kerogen, an organic material that, with enough time, heat and pressure, would convert into crude oil. Several counties in northeastern Utah and southwestern Colorado are home to large deposits of oil shale that could equal as much as 1.5 trillion barrels of crude oil. Ten percent of it lies in the Uinta Basin.

“Which is, if anything, larger than the conventional supply of crude oil in the world,” Isaacson said. “The vast majority of the oil shale deposits in the world are in the western United States. So if an industry were to emerge, it would be in the western United States and it would be a major player in the world petroleum market.”

With smaller resources in place in other states as well, the U.S. has an estimated two trillion barrels of oil in oil shales, while there are an estimated 1.6 trillion barrels in place in Canada and another estimated 1.3 trillion barrels in place in Venezuela, according to Olivier Lazare, vice president new business development for Shell Exploration and Production Co.

“You’re talking about more resources than in Saudi [Arabia], which is wellknown as the land of plenty in hydrocarbon resources,” Lazare said. “The potential is huge.”

Companies have known about these resources for decades, Lazare said, but the problem has always been that the resource is extremely difficult and expensive to extract. To be converted to usable oil, kerogen must be separated from the rock and undergo a chemical conversion and refining process. The technology needed to facilitate this process has long been insufficiently evolved, and the price of crude oil has not been high enough to economically justify large- scale research and development efforts toward oil shale and other nonconventional resources. Both of those things, however, are changing.

“The technology is evolving so that you can find new ways of exploiting these resources,” Lazare said. “For things like oil shales you could think maybe the time is coming. We don’t know yet.”

Interest in oil shale has traditionally been cyclical, Isaacson said, with a boom in development occurring every time the price of oil rises. According to Isaacson’s study, initial production of oil shale began in the United States in 1850, and by 1860 there were 50 or 60 plants in the U.S. and Canada distilling oil from shale or coal, including a plant in Utah. When the conventional petroleum industry was launched in 1859, however, it quickly surpassed oil shale due to higher profits, and all the shale plants were shut down or converted to the processing and use of crude oil by the 1870s.

“As the conventional petroleum industry developed and worldwide trade in petroleum became more common, most of the oil shale operations ceased to exist,” the study says.

Some shale production re-emerged during wartime when other sources and production methods were interrupted, but historically oil shale development has always been more economical on a small scale, for use by local economies, Isaacson said.

During the oil crisis of the 1970s, companies tried to implement existing oil shale technologies on a larger scale, but were unsuccessful. Today’s market, however, is ripe for another effort.

“I’m sure you’ve seen the price of gasoline lately, so there’s a real interest again in oil shale,” Isaacson said.

Due to the increasingly balanced elements of technological advancement and higher oil prices, the government has stepped in to aid oil shale development. The Energy Policy Act of 2005 makes federal lands in Colorado, Utah and Wyoming available for research and development projects related to oil shale and tar sands, another non-conventional fuel source present in Utah and throughout the Rocky Mountain west. Nineteen research and development project nominations were received by the Bureau of Land Management (BLM), Isaacson’s study says. Unlike past attempts to develop oil shale, these nominations focused on developing new technologies to exploit the resource, instead of trying to adapt old methods.

In order to simulate, in expedited form, the naturally occurring chemical reaction, known as pyrolysis, which converts kerogen to crude oil, oil shale rock must go through a heating process called retorting. Numerous above-ground retorts have been developed that involve mining the shale, crushing the rock to the proper size and heating it at the surface to extract the resource. The remaining shale is disposed of, and the oil is upgraded to make the product compatible with existing refineries.

“That was not economic and it’s not particularly environmentally friendly as a method,” Lazare said.

Another method, called in-situ retorting, involves heating the shale in place, eliminating the cost of mining, crushing and disposal. Previous attempts at in-situ retorting, however, encountered problems with controlling and maintaining the underground combustion process, as well as difficulties in handling fine particles and avoiding subsurface pollution.

The BLM accepted six of the 19 proposals for new oil shale development methods, including three proposals from Shell Oil Co. Shell is currently testing a very promising in-situ retorting method at several sites in Rio Blanco County, Colo.

According to Lazare, the method involves digging wells, which: requires no surface mining like old methods. The rock that contains kerogen is heated through the well shaft for several years, simulating the pyrolysis process that would otherwise take several million years.

“You generate that process. You just accelerate it,” Lazare said. “We’re talking about oil and gas directly from the source rock. That’s why we call it unconventional. It’s not a traditional type of reservoir.”

Then, while the rock is being heated through one well shaft, another well is dug through which the resource can be extracted. While that well is extracting, another well would be heating another area of the rock, keeping production constant. Due to the slow heating, the method would yield a better, more refined product than current crude oil, Lazare said. The process would take several decades to be operational, however, and so far only research and development leases have been acquired.

“We know that in the lab it’s working, but there’s still quite a bit. to be done,” Lazare said. “It’s new technology. And the costs are obviously quite high because we need to dig a lot of wells and we need to inject a lot of heat.”

Though Shell is testing the method on more clearly defined resource areas in Colorado, the potential impact of the development in Utah is significant.

“If it does go, it’s going to be a big change in western Colorado and eastern Utah,” Isaacson said.

A Shell operation alone would require 20,000 new employees in the state, Isaacson said, and the economic structure of the resource- rich Uinta Basin area would change dramatically, with support structures growing to meet the needs of an expanded oil and gas industry. The Uinta Basin now brings in most goods from the outside, but a booming oil shale industry would move the area toward increased self-sufficiency.

“You’re going to see many more industries supporting and growing up around it,” Isaacson said. “The area would not be so dependent on one industry.”

The potential economic and social impact is not lost on Shell, Lazare said, and in addition to testing new extraction methods, the company is also experimenting with new ways to minimize the negative results of large scale developments, particularly reducing carbon dioxide emissions.

“It has potential to be a very large development. That has an impact on society,” Lazare said. “We’re getting better at it. We’re learning from some of our mistakes in the past.”

In addition to Shell’s research and development, a Utah company called U.S. Shale Exploration Co. is testing a new above-ground retort system at the White River Oil Shale Mine near Veinal.

“It’s radical enough that it’s different than what’s been used in the past,” Isaacson said.

The White River site was developed during the energy boom of the late 1970s and early 1980s and cost $80 million to construct, but was abandoned in the mid-1980s when responsibility for the site reverted to the BLM.

U.S. Shale Exploration proposes to develop oil shale using equipment known as an Alberta Taciuk Processor. The technology is a modification of a cement kiln and was originally designed to extract bitumen, a highly viscous hydrocarbon, from tar sands in Canada. The Alberta Taciuk Processor is “considered by some to be state-of-the- art in surface retorts,” Isaacson’s study says, and has been applied to oil shale in Australia and Estonia.

The company plans to truck previously mined oil shale from the White River Oil Shale Mine up to the existing retort in Canada. If the method is successful, the company will build a small scale operation in Utah, Isaacson said.

“They’re taking it slow and making sure it works,” he said. “But I think if surface retort goes, it’s going to be that.”

Whatever method is deemed the most effective and profitable, it will be at least 20 years before any full-scale production comes on line, Isaacson said, and development will most likely continue even if the price of oil drops in that time. Shell has already been in oil shale development for two decades, even though 10 years ago oil cost only $15 a barrel.

“I think there’s still going to be technology looked at,” Isaacson said. “They are keeping the research going. And frankly, I can’t see the price of oil dropping precipitously. I think we’re still going to see efforts toward oil shale.”

Future development will probably focus on the five-county area of Duschene and Uintah counties in northeastern Utah and Garfield, counties, pulus Moffat and Rio Blanco Counties in southwestern Colorado. The long-term economic impact on Utah would depend on the size of the industry and the rate at which it develops, according to Isaacson’s study. The Department of Energy envisions two million barrels of oil a day being produced from western oil shale by 2020, and three million barrels a day being produced by 2030.

“To put these production levels in perspective, the United States is currently producing about five million barrels of conventional crude oil per day and importing about 10 million barrels per day,” Isaacson’s study says. “At a more local level, Utah is producing 45,000 barrels, Colorado 60,000 barrels and Wyoming 140,000 barrels of crude oil daily. Obviously, the development of an oil shale industry producing several million barrels of oil daily would cause significant changes in the area’s economy.”

Using current productivity levels for the oil and gas production and refining industries, as - well as the coal mining industry, as a gauge, Isaacson’s study estimates that an oil shale industry producing 100,000 barrels of oil a day would directly employ between 5,000 and 10,000 people. In other words, an oil shale industry producing at that level would employ from 4% to 9% of the projected workforce in the five counties mentioned above by 2030.

The development of a large-scale oil shale industry would also result in large in-migration to those areas. Associated social costs would include strains on local resources and infrastructure including housing, schools, utilities and roads.

“Some of these impacts can be mitigated through the planning and permitting process, but development of a large-scale oil shale industry will definitely alter the economic and social structure of nearby communities,” the study says.

Large-scale oil shale development in Utah would also require additional refinery capacity, and, if the state were producing one million barrels of oil a day, Isaacson said, pipeline capacity and export capabilities would need to be increased, though that possibility is still decades away.

“I don’t know if it’s probable near-term,” he said.

On a larger scale, the introduction of increased resources from a high-producing oil shale industry could improve global oil prices.

“More supply will definitely help stabilize and bring the price down,” Isaacson said. “But it’s not going to be a flat line from now on.”

There is some possibility, according to Isaacson’s study, that the current increased interest in oil shale is just another periodic boom that will be once again followed by a slump. In addition, “the future of the western United States oil shale industry is strongly linked to the future price of conventional crude oil.”

With the futures market expecting crude oil prices exceeding $60 a barrel for the next six years, and with oil shale production costs expected to drop as technology improves, it seems more likely that the current oil shale boom will be longterm.

“It’s definitely going to be on the horizon if oil prices stay where they are, and I think they’re going to be high,” Isaacson said.