Vast 'oil' reserves in Utah may tempt feds to help out

WASHINGTON — Utah, Colorado and Wyoming sit on a massive fortune in untapped oil — maybe more oil than in the Middle East — if they could just figure out a way to harvest it.

And with crude oil hovering above $50 a barrel, Congress is now showing signs it may be willing to help.

On Tuesday, the Senate Energy Committee held hearings on the vast reserves of oil found in tar sands and oil shale located in eastern Utah, western Colorado and southern Wyoming. The amounts of oil, said Sen. Orrin Hatch, R-Utah, "are mind boggling. Who would have guessed that in just Colorado and Utah, there is more recoverable oil than in the Middle East, except we don't count it among our nation's oil reserves because it is not yet being developed commercially."

And therein lies the rub. The technology to recover oil from tar sands and oil shale is costly, and it just wasn't justified when oil was $30 or even $40 a barrel.

But with oil prices expected to remain above $50 a barrel for the foreseeable future, a lot of people in the oil industry want to revisit what could become a huge financial windfall for Utah and its neighbors to the east.

"If we can get it out, it will be a huge resource for the United States and a significant industry for the two states," said Sen. Bob Bennett, R-Utah. "But getting it out at an economic level is a problem."

On one hand it will cost billions to develop and implement the technology. And there also is a problem in that the oil shale and tar sands are located in a portion of eastern Utah coveted by conservationists for its wilderness qualities.

"The wilderness advocates will say, 'Over my dead body.' But it looks like oil prices are going to stay above $50 a barrel, and I could see people moving into this business in a big way," Bennett said.

Congress could be the wild card when it comes to defraying the cost of jump-starting oil shale and tar sands oil production. If Congress were to infuse massive amounts of research capital into production through the Department of Energy, the United States could conceivably generate enough oil to wean itself from foreign oil.

"If there is a federal role, it is in the investment into research to make it happen," said Rep. Jim Matheson, D-Utah, who sits on the House Science Subcommittee that would need to approve research and development funding. "Right now, the technology is not there."

Hatch, who testified at Tuesday's hearing, pointed out that Canada has invested heavily in tar sands technology to reap oil from Alberta. And it has paid off.