The Carter administration will ask Congress to finance construction of an oil shale recovery plant in the Colorado Rockies as part of its plan to develop new energy sources, officials said yesterday.

The administration has not chosen a site for its oil shale plant and has not decided how big the plant will be, but sources close to the White House said it will probably be on federal land in Colorado's Piceance Basin and could produce about 5,000 barrels of oil a day. Even a plant that small will take two years to build and cost an estimated $100 million, the sources said.

The oil shale effort is expected to be announced when President Carter sends his energy policy message to Congress April 20 but could come sooner if the White House decided to spotlight the oil shale recovery project.

The purpose of the move into oil shale is to demonstrate that oil can be extracted economically from shale rock without disturbing the environment of the Rocky Mountains and without using huge quantities of scarce Western water in the process of extraction.

"This will be a research and development project," one administration source said. "Not a crash program to provide large amounts of domestic oil to run through our refineriess."

Extracting oil from the shale cliffs of the Rockies has been discussed by the administrations of the last four Presidents and by most of the major oil companies for the last 30 years. To date, only a trickle of oil has been produced from the four oil shale basins nestled in the mountains of Utah, Wyoming and Colorado.

The costs of extracting oil from the shale rock has skyrocketed in some cases to as much as $25 a barrel. That is twice what world oil sells for right now.

A dozen oil companies have suspended work on oil shale recovery because of the extraction costs.

At the same time, strong environmental objections have been raised against most methods of oil shale extraction which involve burning the rock in the open air to get at the oil and using enormous quantities of water to cement the spent shale that must then be disposed of in mountains of slag.

More than 70 per cent of the richest oil shale land in the Rockies lies on federal land with only a few of the tracts leased to private oil companies. Less than a year ago, the Interior Department suspended four of these leases in Colorado and Utah when six environmental organizations went to court to stop work on the leases.

Despite these setbacks, the possibility of extracting oil from shale was one of the first energy moves contemplated by the Carter administration. The main reason is that government and oil company geologists estimate there is as much as 1.8 trillion barrels of oil locked in the shale of the Western mountains.

"Oil shale in the U.S. contains more oil than the world's known reserves of crude oil," according to a briefing paper done by three federal agencies last November for former President Ford's now-defunct Energy Resources Council. "These as yet untapped oil shale deposits could provide critical liquid fuel supplies between now and the end of this century."

The oil extracted from the shale rock of the Rockies is heavier than crude oil but is lower in sulfur than most crude oils and can be refined to make gasoline, jet fuel and almost all the hydrocarbon feedstocks crude oil supplies.

In the last year, oil from shale has burned by a Michigan electric company to make electricity. It has also been used to power a tanker on the Great Lakes and a U.S. Navy destroyer in the Atlantic Ocean. Jet fuel has been refined from shale oil and used by jet fighters of the U.S. Air Force.

Three new techniques of extracting shale oil have been pioneered in the last two years, one by an oil company, a second by a federal laboratory in California and the third by an engineering concern in Wyoming.

One of the most promising methods is used by Occidental Petroleum Corp. on its tract of private land at the edge of Colorado's Piceance Basin. The Occidental technique has produced almost 50,000 barrels of oil from one mined-out tract 600 feet deep in the mountain. Occidental has said it can produce oil by its method for $11 a barrel.

Occidental's method is to tunnel into oil-rich rock, then mine out the top part of the shale and set off explosives in the rest of the shale. A fire is then started at the top of the rubbel. Its flame is controlled by air pumped down from above.

When the rock is heated to 900 degrees Fahrenheit, oil begins to pour from the rock and falls down in the cracks in the rubble to a basin at the bottom of the rubber pile. The oil is then pumped out of the basin to the surface, where sand and chemical impurities are removed. No water is needed to carry off the slag.