As the price of oil soars on world markets and demand for energy grows, energy companies are looking at so-called unconventional sources such as Canada's oil sands and the vast deposits of oil shale in the Rocky Mountain states. Geologists say half of the world's known oil shale lies deep underground in western Colorado, eastern Utah and southern Wyoming, amounting to more than one trillion barrels of potential oil. But this is rock, not liquid, and the very expensive trick is to convert it to useable liquid fuel. VOA's Greg Flakus has more in this report from the Piceance basin in northwestern Colorado.

The Shell Mahogany Research project in the Piceance basin could either represent the energy future for the United States or a costly fiasco. The idea is to drill down into the shale rock to access a chemical called kerogen, which can be subjected to high heat to produce oil.

Past efforts by other oil companies to dig out, crush and process shale went bust after the price of crude dropped dramatically in May, 1982. But prices are at record high levels Monday, and Shell spokesman Tracy Boyd says his company uses heated tubes sunk into the shale to process and extract the oil.

"We are taking the heat right into the oil-shale formation and converting the organic material that is there, called kerogen, into a producible liquid hydrocarbon," said Boyd.

While the shale in the middle of the site is heated, the area around it is frozen. To make this so-called freeze wall, workers pump cold ammonia through pipes around the site. This technique is used frequently at building sites to keep water out of the foundation pit, but Boyd says it does double duty here.

"The freeze wall has two main purposes," he said. "One is to isolate the area within the wall so that we can de-water that area and heat the shale more effectively, but the other thing it serves to do is protect the water-bearing zones outside the freeze wall from being exposed to the hydrocarbons that are liberated through our production process."

At the Colorado School of Mines, Jeremy Boak serves as Project Manager for the state's Energy Research Institute. He says Shell's ambitious experiment could pay off, but there are great challenges to meet.

"The reserves are very large," said Boak. "The potential to build them up is perhaps less, in that it takes a good deal more work to get the oil out of the ground. You are essentially cooking a rock that is not ready to produce oil yet."

One of the biggest problems he sees is the enormous amount of electricity that will be needed to heat the shale and the carbon dioxide the power plants could produce.

"Most of the CO2 is coming from the power plants that are built to heat the rock underground," said Boak. "So, if you have a different approach, if you use nuclear, if you can establish renewable energy, then maybe you have less of a CO2 problem, but the amount of energy is really large."

"My estimate was to produce three million barrels a day, you would have to have four times the current installed wind capacity of the entire U.S. [United States]. So it is a lot of electricity if that is what you are using to heat underground," he added.

This is also a principle concern for environmentalists like Elise Jones, Executive Director of the Colorado Environmental Coalition in Denver.

"How can we embark on a new energy source that has enormous, enormous greenhouse gas emissions to produce the oil shale and then to use the oil shale?," said Jones.

Jones says environmentalists do not oppose all energy projects, but they are concerned that a rush to develop resources like shale could endanger the state's natural beauty as well as its air and water.

"We are producing oil and gas at record-breaking levels," said Jones. "We have drills popping up like mushrooms across the west slope of the state, so we are doing our part, but the notion of imposing on top of that another overlay of industrialization on the landscape, that is asking a lot."

But Shell's Tracy Boyd says his company is moving very cautiously on shale oil development, trying to determine how to get out the oil without damaging the environment.

"I think the answer to that remains to be seen and that is why we are involved in research and development on a slow and methodical scale so that we can resolve and answer all of those questions," said Boyd.

Given the slow pace of experiments by Shell and other companies, it may be 20 years before significant amounts of oil from this area's shale rock can be produced for market. In the meantime, both the energy industry and environmentalists will be keeping a close eye on this remote area.