The embryonic oil shale industry is looking at ways it would pay royalties to the federal government in the event it ever is able to draw petroleum from rock.

Politicians, meanwhile, are dueling over whether the federal government should have moved ahead on plans for shale development.

The debate was set off Tuesday when the Bureau of Land Management issued draft rules for commercial production of oil shale.

Among the elements of the plan are three options for federal royalties on shale:

One, a flat 5 percent royalty; two, a 5 percent royalty on initial production and a 12.5 percent royalty thereafter; or three, a sliding scale based on the market price of oil.

Colorado Gov. Bill Ritter and Sen. Ken Salazar, D-Colo., said they were angered by the release of the draft regulations, with Ritter calling the move “premature, unnecessary and irresponsible.”

Shell Oil, which generally is acknowledged as leading the effort to draw petroleum from shale using a method that leaves the rock in place, said the draft regulations were a long time in coming.

“We’ve been pushing very strongly to have regulation proposed,” said Tracy Boyd, communications and sustainability manager for Shell Exploration and Production Co.’s Unconventional Oil Division. In setting regulations, the federal government “literally will be defining the rules of the road” and establishing the guidelines under which companies can decide whether their technology is commercially feasible, Boyd said.

Shell is working on three research and development leases in northwest Colorado, as well as on private property, but has said it won’t make any decision on whether to seek commercial production of shale until the middle of the next decade.

Salazar, who last year sought and won a one-year moratorium on the publication of a final rule for commercial production from oil shale, said the Bush administration was “trying to set the stage for a last-minute fire sale” of commercial leases with the publication of the draft regulations, which now are subject to a 60-day comment period.

The BLM was free to publish a draft rule, the agency noted, because the moratorium applied only to a final rule.

Sen. Wayne Allard, R-Colo., dismissed Salazar’s fire-sale complaint as ridiculous because the process of rule-writing began in 2004.

The oil shale industry is in its infancy, Frank Smith of the Western Colorado Congress said, citing the same finding in the draft rule itself.

“We need to know what technology would be available and what technologies would impact the environment,” Smith said.

The federal government also needs to know how local communities, wildlife and water will be affected, he said.

“There are a couple forms of prices we’re talking about,” Smith said.

Oil shale in Colorado, Utah and Wyoming contains the equivalent of 800 billion barrels of crude oil, according to the draft rule. Other estimates have said as many as 2 trillion barrels of oil are locked in the rock.

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E-mail Gary Harmon at Gary.

Harmon@gjsentinel.com.