An auditor told Congress last week that the Green River Formation in Wyoming, Utah and Colorado contains about as much oil as the "entire world's proven reserves," making it the "world's largest deposits of oil shale."
 
The formation is largely — about 75 percent — on federal Bureau of Land Management lands in the states, making it possible for the government to extract funding from the shale formation almost as well as the companies that may extract the oil.

Anu Mittal, director of natural resources for the federal General Accounting Office, said the U.S. Geological Survey estimates 3 trillion barrels of oil in the 1,000-foot sedimentary rock formations under the three states. She said about half of the payload should be technically recoverable, "depending on available technology and economic conditions."

The standard royalty rate for a company to extract oil on federal lands amounts to 12.5 percent, and has been in place since the 1920s, according to Secretary of the Interior Ken Salazar, who said he is studying how to up that royalty in the future.

Assuming static prices of oil and equal distribution of recoverable shale, at about $100 per barrel, extraction of 75 percent of 1.5 trillion barrels of oil would net more than $14 trillion for the federal government, or about $2 trillion shy of the national debt.

And that says nothing of state severance taxes or other windfalls for government. But Mittal also voiced a warning about possible development.

"While large-scale oil-shale development offers socioeconomic opportunities, it also poses certain socioeconomic challenges that also should not be overlooked," she said. "Oil shale development, like other extractive industries, can bring a sizable influx of workers who, along with their families, put additional stress on local infrastructure. Development from expansion of extractive industries has historically followed a boom-and-bust cycle, making planning for growth difficult for local governments."

Additionally it can stress local water resources.

"Developing oil shale and providing power for oil shale operations and other activities will require large amounts of water and could have significant impacts on the quality and quantity of surface and groundwater resources," Mittal said. She also said development puts at risk air quality and certain land and aquatic species.