Concerns over fluctuating oil prices and declining petroleum production worldwide have revived interest in oil shale as a potential resource. The Energy Policy Act of 2005 identified oil shale as a strategically important domestic resource and directed the Department of the Interior to promote commercial development. Oil shale development would require significant amounts of water, however, and water supply in the Colorado River Basin, where several oil shale reserves are located, is limited. According to news reports, oil companies holding water rights in the region have not exercised those rights in decades, which has allowed other water rights holders to use the water for agricultural and municipal needs. Because of the nature of the water rights systems in the relevant states, these users might face significant limitations in their future use of water from the Basin if the oil companies exercise their rights. This report will provide a brief overview of water rights in Colorado, Utah, and Wyoming, including changes that may be made to currently held water rights and the possibility for abandonment of unused water rights.

Oil shale deposits in Colorado, Utah, and Wyoming are estimated to contain up to 3 trillion barrels of oil -- or an amount equal to the world's proven oil reserves. About 72% of this oil shale is located beneath federal lands. Extracting this oil is expected to require substantial amounts of water and could impact groundwater and surface water. This report examined: (1) what is known about the potential impacts of oil shale development (OSD) on surface water and groundwater; (2) what is known about the amount of water that may be needed for OSD; (3) the extent to which water will likely be available for OSD and its source; and (4) federal research efforts to address impacts to water resources from OSD. Charts and tables. This is a print on demand report.