Experts estimate up to one trillion barrels of oil could be squeezed from the shale rock and sands, but the process consumes huge amounts of water and carries with it potentially devastating environmental impacts.

On its way out the door last fall, the Bush Interior Department tried to lock in rules that would require oil shale royalty rates for production on public lands starting at about 5 percent – far below traditional oil and gas royalty rates because of the speculative nature of the resource.

In its ongoing investigation of former Bush Interior Secretary Gale Norton, who later signed on as an attorney with Dutch Royal Shell – one of the leading researchers of oil shale production in Colorado – the Times turned up e-mails where Norton tips her hand on the strategy she suggested for locking in royalty rates despite changing administrations.

Norton, who’s being probed by the Obama Justice Department for allegedly using her Interior post to secure a job at Shell, said she thought Obama Interior Secretary Ken Salazar might be more inclined to defend the Bush rates because of legal challenges from environmental groups.

But a Shell official questioned that approach because it could seem as if they were admitting the 11th-hour process was flawed and because the rates were too low.

Oil shale production involves either mining shale and super-heating it to force out the kerogen, or organic matter, in order to refine it into petroleum; or heating the shale underground in what’s known as in-situ production. Both methods require huge amounts of water and electricity, and environmentalists argue research and development funds would be better spent on renewables.

Another speculative source of future energy – shale gas – was debunked by an expert this week at the Association for the Study of Peak Oil and Gas conference in Denver. Arthur Berman, a geological consultant from Texas, said shale gas plays may not be nearly as promising as some proponents claim, and that speculation on the resource may be the next energy bubble to burst.

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Ken Salazar at a Sept. 15, 2008 Barack Obama rally in Grand Junction, Colo. (Photo/Topher Simon, Flickr)

In Lakewood today to visit the scandal-plagued offices of the Minerals Management Service (MMS) with a message of sweeping reform, Salazar in recent days has also clearly signaled he will try to slow the pace of oil-shale development on the Western Slope.

That flies in the face of efforts by Republican state lawmakers such as Sen. Kevin Lundberg to take advantage of last-minute Bush administration regulations on oil shale production and provide incentives to the oil and gas industry at the state level.

In an Associated Press (AP) interview Tuesday and again in a White House press briefing Wednesday, Salazar urged a slow approach to oil shale for environmental reasons and repeated that he will review Bush administration “midnight” regulations that put in place an oil shale management plan and set royalty rates for production on federal lands.

According to the AP, Salazar:

– Cautioned against pushing too fast on oil shale development in Colorado, Wyoming and Utah until more is known about the impact on water resources and climate change. Oil shale extraction requires a lot of water that could strain the resources of the Colorado River and huge amounts of electric power that could impact climate change, he said. “We’re going to have to be very thoughtful in the way it’s going to be developed.”

– Promised to review at least 10 “midnight regulatory actions” by the outgoing Bush administration, citing as examples regulations to limit the reach of the Endangered Species Act, oil shale permitting, and oil and gas permits issued near two national parks in Utah.

“I’m troubled by many of the ‘midnight’ actions by the administration. We’ll take a look at them one at a time and make the right decision going forward,” Salazar said.

Lundberg, in an interview with the Colorado Independent Tuesday called such federal policy “shortsighted. …

“We as a nation, I am hopeful that we will start figuring out that we need more energy, not less, and that it is in our best interest at every level that we encourage responsible production of all of our energy resources,” Lundberg said, referring to a bill he plans to reintroduce in the state Senate giving oil companies a 20 percent severance tax break until 2020.

“Here in Colorado, we have a great deal [of domestic energy] to draw on, not the least of which is oil shale. You could argue the opposite [of Salazar], that oil shale is the future of energy production in Colorado, and I believe we need to encourage it.”