Hosted by the Colorado School of Mines and the Center for Oil Shale Technology and Research, the meeting, which runs through today, highlighted technological progress being made on six previous research, development and demonstration (RD&D) leases (five in Colorado and one in Utah).

The Associated Press quoted one industry expert who said 35 different companies are currently working on ways to affordably extract kerogen – organic material that’s a precursor to oil – trapped in the oil shale and tar sands of the Green River Formation spread over northwestern Colorado, eastern Utah and southwestern Wyoming.

Citing U.S. Geological Survey numbers much higher than previous estimates, the AP put the Green River reserves at 2 trillion to 2.5 trillion barrels of oil, with western Colorado’s Piceance Basin alone containing approximately 1.5 trillion barrels.

But the question is at what price will that oil be extracted over the next several decades?

Environmentalists, residents of the Western Slope and a growing number of politicians say full-scale, commercial oil shale production would essentially industrialize the highly arid and environmentally sensitive area of the Rocky Mountains, requiring far too much water and power and irreversibly polluting fragile mountain landscapes.

The opposition has politicized the debate, Jeremy Boak, head of the Center for Oil Shale Technology and Research at the Colorado School of Mines, told the AP. Boak said Salazar’s decision to limit new RD&D leases and more closely monitor their progress will inhibit research.

“I feel like the arguments are highly political arguments, not technical ones,” Boak said.

But Gov. Bill Ritter Tuesday issued a statement supporting Salazar’s new rules for the next round of RD&D leases, as well as his decision to pursue an Interior Department investigation of amendments made to previous leases during the waning days of the Bush administration. Here’s Ritter’s statement in its entirety:

“Secretary Salazar has wisely decided to institute reforms in the second round of the Research, Development & Demonstration program. Constraints on the size of leases and due diligence requirements are key parts of the Secretary’s new approach to focusing on questions that must be answered before oil shale research can transition to commercial development.

“Colorado has always supported a robust RD&D process to research and evaluate the technologies that could be used to develop oil shale and to better understand the environmental impacts.

“The potential for oil shale development in Colorado, and the economic opportunity that it represents, is huge. But the prospect of commercial-scale activities raises significant questions about how oil shale can be successfully integrated into our state’s economy and how we can protect the state’s environment, water and communities.

“We’re also pleased to learn that the Secretary has asked the IG’s office to investigate the details surrounding the amendment of the leases in January. We had concerns about the process by which these amendments were developed and by a number of their terms.”

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Issued as amendments to six existing research and development leases on public lands (five in Colorado and one in Utah), the 11th-hour Bush regulations set the ground rules for moving forward with commercial oil shale production if and when oil and gas companies arrive at viable technologies capable of affordably squeezing kerogen from shale rock and sand in western Colorado, eastern Utah and southwestern Wyoming.

Some estimates place oil shale reserves in the region’s Green River Formation at up to 1 trillion barrels of oil that could then be refined into petroleum. Kerogen is the organic material trapped in the shale that can be extracted at extremely high temperatures.

But the process remains highly speculative, and environmentalists who have legally challenged the Bush rules say the current technology requires far too much water for arid western lands to support, too much electricity that would further exacerbate global warming and that the process degrades sensitive Rocky Mountain landscapes with adverse impacts on wildlife and tourism.

“We want to avoid the booms and busts of the past,” said Salazar, a former U.S. senator from Colorado, referring to a devastating oil shale bust on the Western Slope in the 1980s. “We want to ensure the potential development is done in a way that is environmentally appropriate, and we want to assure that the American taxpayers get a fair return for the potential development of America’s public lands.”

The Bush rules called for a royalty rate starting at 5 percent to be paid by oil and gas companies to the federal government for the use of public lands. Critics claim that rate is far too low.

“There is a question about how those royalty rates could actually be set when these very important fundamental questions [about technology, water and power] have not been answered,” Salazar said, adding the 11th-hour process was done without public scrutiny and was too favorable to a handful of companies currently holding leases.

“These lease addenda conveyed lucrative benefits to the leaseholders to the exclusion of others,” he said, reading from a letter he sent to the inspector general today. “Further, the addenda were executed at the very end of the last administration and were issued in contrast to the underlying leases without any opportunity for public review or comment.”

Royal Dutch Shell holds three of the Colorado R&D leases and is currently part of an ongoing investigation by the Justice Department of former Bush Interior Secretary Gale Norton, who later accepted a job with Shell. The DOJ is investigating whether Norton, a former Colorado attorney general, gave favorable treatment to Shell in exchange for a position with the company.

“There are serious questions about whether those lease addenda are legal or whether they should be rescinded,” Salazar said, although he said he’ll reserve judgment until the inspector general’s report is completed. At that point he said Interior will either defend the rules, modify them or rescind them.

Salazar also announced the Bureau of Land Management will begin accepting an unlimited number of applications for a new round of R&D leases of up to 640 acres, or approximately one square mile. Energy companies have up to 60 days to apply for those leases, which will be managed under a new set of guidelines.

Besides being smaller than the existing leases, which are for more than 5,000 acres each, companies issued a new lease would have to submit a plan of development within nine months, and once approved by the BLM, would then have to get all state and local permits for development within 16 months.

The development plans, Salazar said, will have to address key concerns about water and power consumption and environmental impacts on wildlife, air and water quality and local communities. Water, he stressed, especially in the Colorado River Basin, is a key concern.

“This is an obviously important question in Colorado and Utah, which are arid states with limited water supplies where commercial oil shale development would have major impacts on agriculture and other uses,” Salazar said.

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