With crude-oil prices inching toward $60 a barrel earlier this month, renewed talk of tapping Colorado's vast oil-shale resources wasn't surprising.
This time, federal lawmakers, including Sens. Wayne Allard and Ken Salazar of Colorado, are wisely urging caution in possible shale development to avoid the dislocations of the frenetic oil-shale boom and bust of the early 1980s.
The Senate Energy Committee is looking at a new process being tried by Shell Oil. Holes are drilled into shale formations and electric heaters suspended in the wells to "cook" out the oil.
"I think that I'm in favor of moving forward on a trial basis and we'll see what the environmental impacts are," said Allard. "I'm told it uses less energy and less water, and there [is less chance of] groundwater pollution."
The potential for producing oil from shale is so huge that it "should be looked at," Salazar said. He favors moving forward "in a thoughtful manner, based on good science and also in a manner that's going to protect our environment."
Shell, Salazar noted, says it'll take at least five years to learn if the new technology really works.
(During the earlier boom, a method that involved blasting cavernous retorts into rock formations and then igniting the shale to cook off the hydrocarbons produced disappointing results.)
The boom of the late 1970s and early '80s was fueled by crude-oil prices that reached a high of nearly $40 a barrel in late 1981 (or about $80 in today's dollars).
It was thought that the 1.8 trillion barrels of oil locked in the Green River formation in Wyoming, Utah and northwestern Colorado could be developed economically.
Then oil prices plunged sharply, and on "Black Sunday," May 2, 1982, Exxon Corp. pulled the plug on its $5 billion Colony Oil Shale Project near Parachute. Others followed, leaving western Colorado's super-heated economy in a shambles.
Only Unocal's $650 million Parachute Creek project continued, producing 4.6 million barrels of synthetic crude from 1985 to 1990 with a Defense Department subsidy. Unocal proved only that the process worked - not its economic viability.
The fly in the ointment remains cheap Mideastern oil with exploration and lifting costs of less than $5 a barrel. By comparison, it costs $10 to $15 a barrel to separate the oil from the sand in Canada's Athabasca Oil Sands Project, which pumps about 155,000 barrels a day. Processing shale is much costlier, and the huge capital investments required could be wiped out overnight if business conditions change and crude prices fall.
That's why, like Salazar and Allard, we'll temper our enthusiasm with a healthy dose of caution. We've been down that road before.