Since 2005, the “total oil supply” for the United States as reported by the Energy Information Administration increased by 2.2 million barrels per day.
Of this, 1.3 mb/d, or 60%, has come from natural gas liquids and biofuels, which really shouldn’t be added to conventional crude production for purposes of calculating the available supply. Of the 800,000 b/d increase in actual field production of crude oil, almost all of the gain has come from shale and other tight formations that horizontal fracturing methods have only recently opened up. Here I offer some thoughts on how these new production methods change the overall outlook for U.S. oil production.
Let me begin by clarifying that “shale oil” and “oil shale” refer to two completely different resources. “Oil shale” is in fact not shale and does not contain oil, but is instead a rock that at great monetary and environmental cost can yield organic compounds that could eventually be made into oil. Although some people have long been optimistic about the potential amount of energy available in U.S. oil-shale deposits, I personally am pessimistic that oil shale will ever be a significant energy source.
By contrast, the expression “shale oil”, or the more accurate term “tight oil”, is often used to refer to rock formations that do contain oil and that sometimes might actually be shale. The defining characteristic is that the rock is not sufficiently porous or permeable to allow oil to flow out if all you do is drill a hole into the formation. However, enterprising drillers have discovered that if you create fissures in the rock by injecting water (along with sand and some chemicals to facilitate the process) at high pressure along horizontal pipes through the formation, oil can seep back through the cracks and be extracted.
As seen in the figure above, these horizontal fracturing methods have been the main factor behind recent increases in U.S. field production. The key question is how much more growth we should expect. Leonardo Maugeri, senior manager for the Italian oil company Eni, and Senior Fellow at Harvard University, has a new paper in which he predicts that the U.S. could get an additional 4.17 million barrels per day from shale/tight oil plays by 2020, though he notes that any such predictions are problematic: