Oil prices peaked at a 13-year high Wednesday — and experts say trends like that could make Utah's high-cost and high-risk shale oil reserves a viable fuel resource for the future. Again.

"You guys could be a hot little number again, soon," said Larry Nation of the American Association of Petroleum Geologists.

The Energy Department reported that oil reached $40.77 a barrel in New York, the highest recorded price since Oct. 12, 1990, when Iraqi troops occupied Kuwait. Crude oil prices slid back down to $38.93 a barrel after Saudi oil minister Ali al-Naimi called on OPEC to increase output quotas by at least 6.4 percent.

"It looks like the pricing of oil is on another level, and on another tier, which means there is a whole other level of product that is now going to be economically smart to begin to produce," said Nation, specifically referring to Utah's vast reserves of shale oil.

Nation tempers his outlook, however, with the fact that tapping into Utah's oil shale remains a pricey proposition that few might be willing to risk.

"It's really not a reserve until you can afford" to get the oil out, Nation said. "We're certainly going to have to pay for it. The infrastructure doesn't pop up overnight."

Previous attempts to extract oil from Utah's shale came to naught. During the 1973 OPEC embargo, oil prices surged. Cars lined up for blocks at service stations, waiting to gas up on their designated day.

And it was during that frenzy that a rush to find new fuel sources was born. Shale oil, tar sands, coal liquefaction — anything to rescue American pocketbooks. Oil companies invested millions of dollars to develop shale oil in Utah, Wyoming and Colorado.

The Green River Formation, a geologic swath stretching into Utah, Colorado and Wyoming, contains an estimated 1.5 trillion barrels of oil, according to the American Association of Petroleum Geologists. But that oil is locked in shale and can be recovered only when the rock is heated to high temperatures.

Some experts say the technology to extract oil from shale remains too expensive and the prospects are too risky when oil prices, while increasing, are still volatile.

"No one is going to invest in the infrastructure necessary when the oil price could collapse to $10 a barrel," said David Deming, associate professor of geosciences at the University of Oklahoma. "There are still bitter memories."

In a way, Utah was to the 1970s and '80s what California was to the gold rush of the mid-19th century, with speculators vying to invest in and mine the vast reserves of oil locked in tar sands, oil shale and other geologic formations. But companies lost millions of dollars after the promise of profitable shale oil evaporated in the 1980s.

Blame for Utah's shale oil pipe dream went every which way — the economy, the government, OPEC.

The fact is, Congress refused to provide price supports, and the technology was never sufficient enough to produce oil from rocks at a lower price than pumping it from wells, said Doug Jensen, a reclamation specialist with the Utah Division of Oil, Gas and Mining. A report recently released by the U.S. Department of Energy blamed shale oil's downfall to "price uncertainty and immature technology."

It didn't work then, and despite the rising cost of crude, no one seems inclined to try to make oil shale work now, Jensen said.

Nation agreed that shale oil development will only occur once the price of producing shale oil is comparable to that of crude oil. The infrastructure needed to mine shale oil is expensive, and the price of oil must be sustainable to attract investors, he said.

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According to the report from the U.S. Department of Energy, "getting the industry started is the hardest step." High capital costs, investment risks and customary uncertainties surrounding a first-generation facility are hard to stomach, but once started, "a maturing of an oil shale industry . . . can be expected," the report says.

A spokesman for ConocoPhillips, a company involved in the 1970s shale oil boom, said he would not discuss why his company at this time will not take the financial risk to develop shale oil.

"We don't have anything going on there (with shale oil), but we're not ruling out the possibility of it," said John McLemore, a spokesman for ConocoPhillips. "We're obviously interested in the development of oil anywhere it can be found."


E-mail: ldethman@desnews.com

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