Denver — Shell Oil Co. said Tuesday that it is abandoning its quest for water rights on the Yampa River to develop oil shale production, citing delays in the project because of the global economic downturn.

Colorado, Wyoming and Utah are thought to hold 800 billion barrels of recoverable oil in shale. But critics of a federal management plan for developing oil shale on public lands said the process would use too much of the region’s scarce water.

Shell, which is the U.S. unit of Royal Dutch Shell, left open the possibility of pursuing the project in the future.

“The exact scale and timing for development will depend on a number of factors, including progress on our technology development, the outcome of regulatory processes, market conditions, project economics and consultations with key stakeholders,” company officials said in a statement.

Shell said the ultimate goal is to create an operation that is economically viable, environmentally responsible and socially sustainable.

A Shell subsidiary filed the application in water court in Steamboat Springs on Dec. 30, 2008, staking its claim to withdraw 375 cubic feet per second from the Yampa, west of Craig in Moffat County, during high flows fed by snowmelt in spring and early summer.

The application’s flow rate was comparable to a typical flow beneath Steamboat’s Fifth Street Bridge in early to mid-July.

The water would have been taken out of the river at one or two pumping stations about 75 miles west of Steamboat. It would have been stored in a reservoir capable of holding 45,000 acre-feet of water in Cedar Springs Draw, off the main stem of the Yampa.

That potential reservoir’s size could have exceeded the more than 33,000 acre-feet of storage in Stagecoach Reservoir near Oak Creek and the 25,450 acre-feet in Elkhead Reservoir near Craig.

Within three months after Shell’s application, 25 local groups and municipalities — including Routt County, Oak Creek, Yampa and the Upper Yampa Water Conservancy District — filed opposition to the application.

The city of Steamboat Springs argued that its water rights in the Yampa River Basin “may be adversely impacted if the subject application is granted without adequate protective terms and conditions.”

Shell representatives met with local officials in Steamboat last year to discuss the application and its potential impacts. Litigation was possible.

Routt County Commissioner Doug Monger reacted positively to the news of Shell’s withdrawal Tuesday.

“We’re very pleased about it, both for the Upper Yampa Water Conservancy District and for Routt County,” Monger said. “We’re happy that we’re not having to spend a lot of legal money to protect our Yampa water right. … That’s not to say there won’t be another one down the road.”

That road might not be very long.

Last week, the U.S. Army Corps of Engineers released an environmental impact statement about the proposed Regional Watershed Supply Project. Mil­lion Conservation Resource Group is proposing a 560-mile pipeline from Flaming Gorge Reservoir and the Green River in southwest Wyoming to bring water to areas including the Front Range.

The Corps’ study of that proposal is ongoing.

Steamboat Pilot & Today reporter Mike Lawrence contributed to this report.