Eyes on oil shale — again

Oil prices Thursday peaked at their highest level since late October — sparking yet another debate about the viability of Utah's high-cost, high-risk shale oil reserves as an alternative fuel source.

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.

The problem is, nobody seems to know how to get it out at a reasonable price.

"The technology has been around for a long time," said Larry Nation of the association "Now might be the time to put it to good use."

Oil prices settled in at $53.57 Thursday on the New York Mercantile Exchange. The record close set on Nymex last October was $55.17, though prices would have to surpass $90 per barrel to meet the inflation-adjusted peak set in 1980.

And prices could spike as high as $80 in the next two years. OPEC's Acting Secretary General told a Kuwaiti newspaper that oil prices could soar that high if there is a major supply disruption, wire services reported.

"I can stress that the probability that the price of a barrel of crude oil rises to $80 in the near future is a low probability," Adnan Shibab-Eldin told Kuwaiti newspaper al-Qabas. "However, I can't rule out the rise of a barrel of oil to $80 in the coming two years."

Investors won't be willing to shell out any funds for shale oil development if the price of oil is unstable. Shale oil development will only occur if the price of producing shale oil is comparable to that of crude oil, Nation said.

In the recent past, oil prices have been too low to even think about developing shale oil. But prices crept up again and look like they will stay that way, Nation said.

"There has to be enough confidence on the part of an investor that oil prices are going to stay high for oil shale to really take off," Nation said.

Previous attempts to extract oil from Utah's shale didn't work out during the oil crunch of the 1970s.

Oil prices surged to record highs during the 1973 OPEC embargo. Cars lined up for blocks at service stations, waiting to gas up on their designated day.

During that frenzy, 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.

"They thought the era of oil was over, so unconventional resources became very important," Nation said. "Lo and behold, oil prices went down again."