Tapping Shale Reserves, US Would Become World's Top Oil Producer By 2017

Hugh Pickens writes "The NY Times reports that according to a report by the International Energy Agency, the U.S. will overtake Saudi Arabia as the world's leading oil producer by about 2017, will become a net oil exporter by 2030, and will become 'all but self-sufficient' in meeting its energy needs in about two decades — a 'dramatic reversal of the trend' in most developed countries. 'The foundations of the global energy systems are shifting,' says Fatih Birol, chief economist at the Paris-based organization, which produces the annual World Energy Outlook. There are several components of the sudden shift in the world's energy supply, but the prime mover is a resurgence of oil and gas production in the United States, particularly the unlocking of new reserves of oil and gas found in shale rock. The widespread adoption of techniques like hydraulic fracturing and horizontal drilling has made those reserves much more accessible, and in the case of natural gas, resulted in a vast glut that has sent prices plunging. The agency's report was generally 'good news' for the United States says Michael A. Levi, senior fellow for energy and environment at the Council on Foreign Relations, because it highlights the nation's new sources of energy but Levi cautions that being self-sufficient does not mean that the country will be insulated from seesawing energy prices, since those oil prices are set by global markets. The message is more sobering for the planet, in terms of climate change. Although natural gas is frequently promoted for being relatively low in carbon emissions compared to oil or coal, the new global energy market could make it harder to prevent dangerous levels of warming (PDF). 'The report confirms that, given the current policies, we will blow past every safe target for emissions,' says Levi. 'This should put to rest the idea that the boom in natural gas will save us from that.'" The folks over at The Oil Drum aren't quite so optimistic: shale reserves may have an abysmal EROI. And, of course, Global Warming is a liberal myth.

Comments

"Peak Oil"

[argStyopa]

We've heard it before, and we'll hear it again.

"In 1975 MK Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995. In 1997 the petroleum geologist Colin Campbell estimated that it would happen before 2010. In 2003 the geophysicist Kenneth Deffeyes said he was "99% confident" that peak oil would occur in 2004. In 2004, the Texas tycoon T Boone Pickens predicted that "never again will we pump more than 82m barrels" per day of liquid fuels. (Average daily supply in May 2012 was 91m.) In 2005 the investment banker Matthew Simmons maintained that "Saudi Arabia ⦠cannot materially grow its oil production". (Since then its output has risen from 9m barrels a day to 10m, and it has another 1.5m in spare capacity.)" (and that's just since 1975).

Personally, if the US has these sorts of reserves, we're idiots to tap them today. Use it as leverage to keep the Saudis pumping THEIR oil at moderate prices, and exhaust the supplies outside the US before touching our own.

Re:"Peak Oil"

[fuzzyfuzzyfungus]

Personally, if the US has these sorts of reserves, we're idiots to tap them today. Use it as leverage to keep the Saudis pumping THEIR oil at moderate prices, and exhaust the supplies outside the US before touching our own.

Unfortunately that's not how Capitalism works. This would be the definition of collusion or the United States government directing private industry not to make money. We're quite far from China in this respect and that's one area I'd like us to stay away from.

Did you know we get more crude oil from Canada than Saudi Arabia?

You are missing one important point: not all 'oil reserves' are created equal. Some are nice, clean, sweet, crude conveniently buried in relatively uncomplicated rocks at moderate depth. Others are a zillion feet underwater, badly dispersed through some formation that makes geologists cry, or in the form of dubiously flammable shale or tar sands that can be coaxed into releasing just slightly more energy than required for the coaxing if you are willing to put up with ghastly byproducts.

The exploitation of different classes of reserves creates externalities of differing severity. Because markets suck at dealing with externalities, we impose some level of regulation designed either to internalize the externalities or to simply forbid activities that cause excessive negative externalities.

It is entirely possible that, if the US oil reserves are nastier, or if the Saudis need the oil money sufficiently badly to impose the externalities on themselves before we do, we would see a situation where less desirable US reserves remain in reserve until foreign reserves are tapped out.

This would be a situation created by regulatory pressures(which I would argue is hardly a bad thing, if it keeps us from experiencing the... cost insensitivity... that accompanies oil development in places like the Niger delta...); but it would hardly require the establishment of the First People's Patriotic Petroleum Five Year Glorious Plan.

Re:"Peak Oil"

[i kan reed]

You know, I held the same opinion until I decided to do some research to back up my position, and found that only the heaviest oils in the refinement process are any good for plastics(at least the consumer/industrial grade plastics we're used to). Those heavy oils are also the worst ones for burning for energy, with the lightest ones being converted to jet fuel and gasoline.

I'm also pretty impressed with what we're doing with plant-based plastics these days, which are essentially renewable. Not on par with the oil-based plastics, but getting there.

Suffice it to say, I can't really hold that position anymore.

Put your money where your mouth is

[Anonymous Coward]

Global Warming is a liberal myth.
 
Ok. So stop being a consumer. It's that simple. Sure, it means paying more and putting up with some things that oil consumers don't have to put up with but if you're so concerned than stop buying what they're selling. If enough people do it and if enough money goes into green tech than you'll be able to end the oil industry.
 
If you're waiting for the government to hold your hand than you're going to wait a long time before they really abandon the oil culture. By a long time I'm talking generations.
 
There's your choices. What's your next move? Grumble and accept your fate at the gas pumps or do you become forward thinking and move on from oil? I can tell you where I'd place my bets.

Re:It's a sad sign of the times

[ByOhTek]

I'm a moderate liberal, but I wouldn't say I hate oil. I would rather say that I would prefer an alternative (def. more in the way of nuclear, the waste, while worse, is more easily contained).

However, I am strongly against drilling for American oil now. I think, when oil starts running really low in other regions, then we should start drilling it. By that point, they'll have exported all their oil at relatively low prices, and we'll be able to export it at much higher prices. It's an investment.

Re:It's a sad sign of the times

[Joce640k]

The problem lies in the fact the issue isn't black and white. Yes fossil fuels cause Global Warming. However we can't get get off the stuff

Can't? Or don't want to?

Why can't electricity be produced without fossil fuels? A fraction of the current investment in warmongering could build some of those next-gen nuclear power stations that have been discussed here many times. The ones with almost zero safety/waste issues who's theory has been known for decades but none have been built...what's going on there?