I want to post a quick rant on the uselessness of statistics about a country’s oil reserves. I was preparing this afternoon to write a blog post about the revolution in oil production in the US, caused by the adoption of new technologies of fracking and horizontal drilling in areas like the Bakken Shale and the Eagle Ford Shale.
The USGS reports that, with perspective additions, the U.S. holds 32 billion barrels (bb) of oil, 291 trillion cubic feet (tcf) of natural gas, and 10 billion barrels of natural gas liquids in mean potential undiscovered reserves. This is a substantial upwards revision from last year’s estimate – showing how the new technologies are revolutionizing America’s energy outlook.
Then I started doing the math. The U.S. uses about 18.7 million barrels of crude oil equivalent per day (mbd), according to the EIA. Of that consumption, we’re importing about 8.7 mbd, and producing about 10 mbd. That works out to a total annual consumption of about 6.875 bb of oil, of which about 3.65 bb is from domestic production. At those rates, America would completely exhaust its total reserves, as estimated by the USGS at 32 bb of oil in eight years, nine months. So, by April or May of 2021, the United States would no longer have any oil – if these reserve estimates went unchanged.
Clearly, the markets do not believe that the United States, the world’s third largest oil producer, is going to run out of oil by 2021. If people expected the U.S. to stop producing oil in 2021, there would be a significant run on the oil markets.
Now, this may simply be a difference between the specific, geologist-driven language in which you only state that which you absolutely know, but this needs to be clearer. The oil market, and the amount of U.S. production in particular, is at the center of this year’s election debate. Something is lost in translation.
these were just the amounts ADDED to existing reserve estimates by USGS in their 2012 update, not TOTAL reserves:
“The U.S. Geological Survey estimated volumes of technically recoverable, conventional petroleum resources that have the potential to be added to reserves from reserve growth in 70 discovered oil and gas accumulations of the United States, excluding Federal offshore areas. The mean estimated volumes are 32 billion barrels of crude oil, 291 trillion cubic feet of natural gas, and 10 billion barrels of natural gas liquids.”
In the first place, the term “reserves” does not designate the total amount of a mineral that exists in the Earth’s crust. Reserves is as much an economic term as a geologic one. It specifies the measured amount of a natural substance, such as crude oil, which can be produced at a profit using currently available technologies.
Most of the reserve figures I have seen do not include the residual crude retained in depleted oil wells. Tertiary recovery using carbon dioxide would make available, by some figures, crude oil, now excluded from the reserve totals, equal to some 27 years of current consumption.
Further, the USA is in fact a net exported of fossil fuel.
I agree that it is hard to sort the hype and hysteria from the hard data.
Flashback. “By 1984 the last oil well on planet Earth will have pumped the last drop of oil!” Radio program during the Arab oil embargo of the 1970s
US government agencies and their reports have been useless as usable information for many, many decades now. Much like the CPI which does not contain energy or food in it’s price calculations, the oil and gas data are just plain useless to ordinary citizens in national debates and decisions.
Every year for as long as I can remember “they” have been saying that there’s only 30 years of oil left. I turned 50 this year and world wide consumption has increased dramatically since I was born. Predicting that technology will not improve in the future is a failing strategy, apparently.