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Page added on February 11, 2012
U.S. Oil Fields Stage “Great Revival,” But No Easing Gas Prices
The United States has long been seen as a nation in its twilight as an oil producer, facing a relentless decline that began when President Richard Nixon was in the White House. He and every president since pledged to halt the U.S. slide into greater dependence on foreign oil, but the trend seemed irreversible—until now. Forty-one years later, U.S. oil production is on the rise.
U.S. oil fields yielded an estimated 5.68 million barrels per day in 2011—their highest output since 2003, thanks largely to a surge of new production from shale oil that lies beneath the Great Plains. The rush so far is centered in North Dakota, where oil production has quadrupled since 2005, but drilling is set to spread across the prairie and beyond.
(Related: “Shale Oil Boom Takes Hold on the Plains“)
“A ‘great revival’ in U.S. oil production is taking shape,” said Jim Burkhard, managing director of the energy consultancy IHS Cambridge Energy Research Associates in testimony last month before a U.S. Senate committee. The resurgence provides the United States a welcome measure of energy security at a time of global economic uncertainty and geopolitical risk, he said.
Yet the U.S. government’s own energy analysts and many experts see a limit to this new gusher. The technological advances that have driven the revival—high-volume hydraulic fracturing combined with horizontal drilling—can only squeeze so much more crude out of the U.S. landscape, they say. Projections are that U.S. oil production will never again reach the lofty heights of the 1960s, even without environmental concerns slowing development or hampering industry with new costs.
But most importantly for U.S. consumers, the new supply is not expected to provide relief at the pump. The price of gasoline, still governed by global geopolitical factors like Middle East conflict, burgeoning economic growth in Asia, and constraints on supply around the globe, is projected to increase at a rate of nearly 2 percent per year. In the United States and elsewhere, the only way to escape the ever-higher price of oil in the future, the experts agree, will be to use less of it.
A Surprising Surge
U.S. crude oil production has dropped by more than a third since its peak in 1970, and as Burkhard said in his Senate testimony, “The long decline . . . was never supposed to end.” But instead, since 2008, the United States has seen a greater gain than any other nation in its “total liquid fuels” supply, taking into account the ramp-up of oil alternatives such as ethanol. In a single year, from 2009 to 2010, oil and gas industry spending on U.S. prospects increased 37 percent, to $69.4 billion, he said. The investment reflects high hopes for the future. “The scale of the opportunity to boost oil production in the United States is larger than in most other countries over the next decade,” he said.
President Barack Obama highlighted the new oil development in his State of the Union address, saying, “Last year, we relied less on foreign oil than in any of the past 16 years.” Indeed, imports have fallen to about 50 percent of U.S. liquid fuel supply, down from 60 percent as recently as 2005, according to the U.S. Energy Information Administration (EIA). EIA’s new analysis released last month says that imports are on track to fall to just 37 percent of supply by 2035, significantly less than the agency’s projection only a year ago.
A persistent drop in consumption—nearly two million barrels a day since its high point in 2005 due to a slowing economy, efficiency improvement, and consumer scaling back on travel due to high prices-has contributed equally to the decrease in imports.
(Related: “Driving the Limit: Wealthy Nations Maxed Out on Travel?“)
When the new oil is considered along with the new natural gas production spurred by the same technology—fracking—some experts have claimed that the United States, the nation that was the birthplace of the oil industry, could become the world’s top liquid fuels producer again, surpassing Saudi Arabia and Russia.
(See interactive on fracking technology: “Breaking Fuel From Rock“)
But projections by the EIA and the Paris-based International Energy Agency indicate that is unlikely. They expect the U.S. resurgence to hit a ceiling much sooner. EIA projects that the U.S. oil industry will add about 1 million barrels per day to production over the next decade, an increase of about 18 percent. But that’s still 30 percent below the 1970 peak, and its forecast to fall slowly after 2020, back down to just over 6 million barrels per day, about 7 percent above today’s level.
“It’s a modest increase—not a huge increase,” said Richard Nehring, founder of the energy consulting firm Nehring Associates in Colorado Springs, Colorado. “The reason is a lot of the new production just replaces old production that’s declining.” Oil production in California and Alaska, the second and third largest-producing states behind Texas, has been in decline for more than 20 years, he noted.
North Dakota now is fourth in oil production, thanks to the booming development in the Bakken Shale, which sits beneath the western half of the state and neighboring Montana, extending north into Saskatchewan, Canada. The same hydraulic fracturing technology that has unlocked huge new supplies of natural gas across the United States has opened the door to unanticipated production of shale oil, sometimes known as “tight” oil. The oil industry is already leasing land for drilling in a similar formation, the Niobara Shale, beneath Colorado, Wyoming, Nebraska and Kansas. Production in the Eagle Ford shale, in South Texas, is increasing rapidly.
Limits and Doubts
But uncertainties abound regarding this newfound oil supply. New regulations are expected due to concerns that the water-intensive process, which results in a large amount of polluted “flowback” water rising to the surface, is a threat to groundwater and land. In his State of the Union Address, Obama said he wants companies that drill on public lands to disclose the chemicals they use.
(Related: “A Dream Dashed By the Rush on Gas“)
And there are other issues. When first tapped, oil shale wells start off strong, but their production typically declines some 50 percent in the first year, and in later years drops further. “These wells have a pretty steep decline in their first year,” said oil analyst John Staub of the EIA. “It requires a high rate of drilling to maintain production,” let alone make it grow.
Indeed, the pace of oil drilling in the United States is now at a 25-year high, and EIA projects the rate will rise even higher, pushing oil shale production to nearly 1.5 million barrels a day, or 20 percent of U.S. production. The oil shale boom is expected to max out around 2030.
“Tight oil is a pretty new resource,” Staub cautioned, “so there’s definitely uncertainty about how widespread it might be. Production could be lower or it could be higher.”
To be sure, the EIA expects to see other sources of new oil production in the United States. Although conventional onshore oil production is expected to continue to slide, more oil may be squeezed out of old oil fields, mainly by pumping in carbon dioxide and other newer “enhanced oil recovery” techniques to flush out recalcitrant fluids.
Offshore development, particularly in deepwater, is expected to continue apace after the lifting of the moratorium imposed after BP’s 2010 Deepwater Horizon disaster, which resulted in the largest U.S. oil spill ever, in the Gulf of Mexico. The EIA expects some offshore projects to proceed in the Arctic, but these would not be enough to reverse Alaska’s decline in production, and its production would fall from 560,000 barrels a day now to less than half that, 270,000 barrels a day, by 2035.
But even with the United States hoping to produce a larger share of the oil it uses, consumers won’t pay less. The price per barrel of crude oil, which was between $85 and $110 per barrel in the United States in 2011, is expected to be $120 by 2016 and $145 by 2035, in today’s dollars, EIA projects. (That means a whopping nominal price of $230 per barrel by 2035.) In today’s dollars, a gallon of gasoline would cost $4.49 by 2035, an average increase of 1.6 percent per year.
Demand for gasoline is soaring in China and India, lifting the price of the globally traded commodity. And outside of OPEC members, the rest of the world’s production has reached a peak or plateau, which a boost in U.S. production would do little to change, said David Greene of the U.S. Department of Energy’s Oak Ridge National Laboratory in Tennessee.
In the words of International Energy Agency chief economist Fatih Birol, “The age of cheap oil is over.” (See: “Has the World Already Passed Peak Oil?“)
Looking ahead, the U.S. won’t be able to eliminate the cost of oil dependence just by boosting production alone, Greene said. Improvements to cars’ gas mileage and other efforts to use energy more wisely would make a big difference. “It doesn’t mean that we’ll get rid of imports,” he said. But if the United States makes efforts both to increase production while decreasing demand, the country could “shrink imports down to a manageable size.”
(See: “Iran’s Undisputed Weapon: Power to Block the Strait of Hormuz“)
Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, said the new drilling boom should not blind the nation to the need to tap other energy resources that don’t carry oil’s costs.
“The energy mix we have now is heavily domestic due to the expansion of North American fossil resources,” Kammen said. “But an arguably larger energy efficiency and renewable energy resource exists in North America.” He said that would do more to create jobs and build industry over the long term.
25 Comments on "U.S. Oil Fields Stage “Great Revival,” But No Easing Gas Prices"
Isaiah on Sun, 12th Feb 2012 12:53 am
Peak oil is a liberal hoax propagated by Big Oil and the media to justify higher oil prices and, thus maximize profits. It’s a scientific fact that oil is produced abiotically in the mantle of the earth; Russian scientists and Thomas Gold have proved this beyond a reasonable doubt. Furthermore, Baptist Preacher Lindsey Willians-who has close ties with unnamed top oil executives-has said that there is, at least, 200 years worth of oil in Alaska, but that it’s being capped off to raise prices. M. King Hubbert was a communist interloper who started the socialist idea of “finite resources” and “peak oil.” It’s our God-given right to drive Hemi-powered V8 trucks; don’t believe the Commie Pinko environmentalists and the liberal media with all their sky-is-falling and doom-and-gloom global warming & peak oil propaganda. Also, don’t forget about the 100 years of shale gas and thousand years worth of coal that’ll power the American economy for centuries to come. This video disproves peak oil: http://www.youtube.com/watch?v=4bHZRSlhJxY
Isaiah on Sun, 12th Feb 2012 1:08 am
This is a video link showing Preacher Lindsey Williams speaking from a strictly scientific viewpoint: http://www.youtube.com/watch?v=NbakN7SLdbk
There is no energy crisis, the world is awash in oil; don’t believe the liberal lies. It’s a fact that the North Slope of Alaska has as much oil as Saudi Arabia.
Cloud9 on Sun, 12th Feb 2012 1:51 am
Ever feel like Gilgamesh? You can’t talk to people who insist on sticking their fingers in their ears and humming loudly. It’s a waste of time.
Gale Whitaker on Sun, 12th Feb 2012 3:25 am
If the future oil supply is secure why has the price gone up from $30/b to $100/b? Could it be the oil traders believe in P.O.? Anyway all the blather and angst don’t matter, abiotic oil doesn’t matter, the demand for oil is going to outstrip the ability of the oil companies to pump it out of the ground very soon. When that happens our god given right to chaos will ensue.
BillT on Sun, 12th Feb 2012 4:31 am
Isaiah, are you sampling that great pot you are growing for cash? Take off the rose colored glasses and the blinders and look at the real world. There are oil fields that have been depleted for 80 to 90 years and none of them show any signs of regeneration. None.
So, if the process you state really works, it is not in a time line that will save your ass from high prices and eventually no oil. If you are around in a few million years, maybe you can get some oil from that idea. Maybe.
Isaiah on Sun, 12th Feb 2012 6:54 am
Hey Bill,
I don’t wear any rose-colored glasses, sir; I look at the facts and reality. I accept that some oil fields peak, but lots of them fill right back up-like the one on Eugene Island off of the Louisiana coast. And some of the good non-communist Russian scientists dug some super-deep wells like the Kola borehole in 1970, they hit oil below 40,000 ft. Having said that, it is logical to conclude that oil is created deep inside the earth, and that it isn’t made from some dinosaur doo-doo 300 million years ago or whatever. The reason that oil prices are so high is because Big Oil and OPEC are capping production to increase their profits at the loss of we the people; speculators are aslo to blame for the high oil price mess. Another reason for high oil prices is that hippie environmentalists won’t let us drill in ANWR and off the coast of California and the Atlantic seaboard because of socialist, non-American EPA regulations that Mr.Obama has imposed on us. It’s estimated that the US will be energy independent if we tap into those resources. Those marxist hippies are also blocking the Keystone XL pipeline from Canada that’ll supply the Gulf Coast refineries with an extra million barrels per day from the practically boundless Tar Sands of Alberta, which have been estimated to have over a hundred years worth of oil and provide hundreds of thousands of good-payin’ American jobs. So Bill, I suggest you take a look in the mirror and take off those rose-colored glassed of yours and look at the facts. Stop parroting all the liberal propaganda of the “peak oil” theory and that nonsense disseminated by environmentalist hypocrite and swindler Al Gore about “Global Warming.” I think it’s you Bill who needs the reality check, buddy.
BillT on Sun, 12th Feb 2012 9:40 am
Like I said, some have the dark glasses on and don’t accept the end of their lifestyle…lol. It sounds to me like you have been drinking someone’s cool aid and it isn’t in the nice plastic packs.
Your mind has been warped to the point where there is no sunshine coming in at all, just tons of BS from some source you decided was more correct than the rest of the world.
There are no refilling oil sites anywhere. There may be sites that they are able to tap in a more efficient manner and recover oil that was not recoverable by older methods, but it is NOT ‘new oil from some magical source. Sorry.
If that were true, the fields in Texas would be pumping as much now as they did in the last century before 1970 when they peaked. But, if you want to continue to live in your delusional world, enjoy!
BTW: The US Military has said oil has peaked in 2006. I suppose they are also a bunch of ‘liberals’?
Isaiah on Sun, 12th Feb 2012 10:48 am
Bill, I come before you as a humble man. The USA has tons of crude just waiting to gush up out of the ground like on the Beverly Hillbillies, but the environmentalist agenda won’t let us drill because some little stream or pond will get dirty. Well, we can’t be worried about a few fish or birds when the American economy is in jeopardy. Nature was put here for man to use; those resources are there to be utilized. It’s written in the Bible.
That’s the problem with all you liberals, you’re always complainin’ about somethin’: the air; the water; overpopulation; the trees; the critters; global warmin’; peak oil. That’s why the economy is in the gutter, because of excessive environmental regulation.
And the Fed just keeps printin’ money like it’s goin’ out of business which is causing everything to go up in price. I’m sick of all this creeping socialism and communism. We need to vote out Mr. Obongo and put a real conservative American in office like Rick Santorum or Newt Gingrich.
Regarding the military, it is being taken over by socialists who are perpetuating the lie about “peak oil.” Have you heard of the military-industrial complex? The military are claiming that “peak oil” has happened to warrant high oil prices. Halliburton and Exxon-Mobil make a killing when they pay the military officials to promulgate the peak oil myth. This ain’t America if I can’t drive my Hemi-powered V8 Dodge Ram and drive-up to Burger King and order me a Double Whopper combo while listening to Rush Limbaugh and Sean Hannity on the radio!
Bill, you and your liberal ilk have been claiming for decades that the world was gonna run out of resources, that the world was gonna heat up or go into an ice age, that overpopulation is bad, that the whole world was gonna be polluted; none of that has happened so far. So why should anyone give any credence to your doom-and-gloom and dismal “predictions?” They all lack substance and aren’t based on reality or facts. It’s just radical, left-wing propaganda.
BillT on Sun, 12th Feb 2012 10:52 am
Denial is a bad disease to have. It leads to extreme pain eventually. If you treat this as a religious topic, you will be laughed at and eventually considered a nut by any intelligent person. You really need to see a psychiatrist.
BillT on Sun, 12th Feb 2012 10:56 am
BTW: Isaiah, I watched that video…and couldn’t stop laughing. When he uses the Bible to prove his theory, he lost my interest. This man has zero intelligence and education. He may be a back woods preacher talking to people of like education and intelligence that believe his BS. Throwing around 1,000 years worth of this and that only makes him look like the fool he is. Sorry, but if you believe him, you are in for a real lot of pain in the next decades.
BillT on Sun, 12th Feb 2012 11:01 am
“…I’m sick of all this creeping socialism and communism. We need to vote out Mr. Obongo and put a real conservative American in office like Rick Santorum or Newt Gingrich…”
First, Isaiah, they are just other players in the same game and will not change anything. Don’t worry, it will soon be over when it all collapses and we go to martial law and you cannot even buy that oil, you are say we have 1,000 years worth in the US, because the dollars in your pocket will not be worth a roll of Charmin.
Indigoboy on Sun, 12th Feb 2012 11:35 am
Unfortunately, for decent, clear headed Americans, Isaiah is the template of attitude that the rest of the world see as the American machine.
Isaiah has guns and amo., and 200 cruise missiles chugging through the Strait of Hormuz, and he aint afraid t’ use it.
BillT on Sun, 12th Feb 2012 12:51 pm
Indigoboy, unfortunately, you are correct.
DC on Sun, 12th Feb 2012 2:44 pm
Hey bill dont poke the creationist abiotic flat-earthers. Its like wrestling with a pig. You both just get covered in muck and filth, except the pig actually enjoys it. 🙂
FarQ3 on Sun, 12th Feb 2012 3:50 pm
Isiah, you are behaving like a fool and giving christianity a bad name in the process. You must learn to appreciate the gifts of nature placed upon the earth and not to abuse those gifts. There is nothing in the bible that would indicate that you can use the earths natural resourses infinitum. The earth was bountiful in the time of genesis. DC there is also nothing in the bible about the earth being flat or oil being reproduced via abiotics, these are human ideas.
Isiah, unfortunately life will not continue as it used to … get used to change
papa moose on Sun, 12th Feb 2012 4:13 pm
LOL
This was my favourite bit:
“And some of the good non-communist Russian scientists …”
Thank goodness for those good Russians.
Seriously guys stop feeding the troll.
cusano on Sun, 12th Feb 2012 5:44 pm
So shale might produce 1.5 million barrels/day at some point? A far cry from the 18-20 million the US uses/day. Let’s hope that nothing changes in the Middle East. That’s what keeps us going…period!
Kenz300 on Sun, 12th Feb 2012 6:43 pm
The world economy has been shaky at best yet China and India continue to grow every year and increase their demand for more and more oil. Faux noise and the right wing radio talkers all say the supply of oil is endless. Remember when drill, baby, drill turned into spill, baby, spill. Those that listen to them get an oil company informercial every day and begin to believe. Seems like the Republicans will do anything to promote oil use and hinder any alternatives.
Bob Inget on Sun, 12th Feb 2012 7:42 pm
You guys are way too serious. Time to watch right wing imitator Stephen Colbert on Comedy Central.
Colbert inspired Isaiah to post his entirely put-on commentary.
The tip off is in his first sentence;
<>
Reading on we see Isaiah go on to tease us with every old used up cornacopia argument he could think of.
I need humor, it lightens. But Isaiah, leave it to the pros or at least wait till 4/1/12
That’s when
Mike on Sun, 12th Feb 2012 8:18 pm
I don’t even think he’s a troll. I think he’s being ironic. Seriously, he sounds too much like the parodys of that kind of person that one of the moderators at peak oil . Com used to do.
No ones that stupid or more importantly mixes methphors that badly unless they are doing it to provide the straw man argument so everyone else could rush in to show them how stupid they are.
That or he could just be crazy..
Isaiah on Mon, 13th Feb 2012 12:13 am
I’m just a humble, hard-working American roustabout; I wasn’t born with a silver spoon in hand and didn’t grow up in an ivory tower like ya’ll. However, I know the facts about US energy because I used to work on the oil rigs in Texas and I listen to conservative talk radio,which is honest and fact-based. I don’t need no liberal pointy-headed elitist telling me how oil is “running out.”
People have been yammering on about depletion of oil resources since the inception of crude production in Pennsylvania in 1859, yet production keeps growing and growing worldwide. In fact, global current oil production has never been higher, and that’s not even counting all the trillions of barrels the commie environmentalists are blocking from production.
To prove my point,some of the so-called “peak oil prophets” such as Michael C. Ruppert have been harping on about “economic collapse” and “peak oil” for years, and nothing has happened. I don’t know why you people lend any credence to this dismal, demented fool and put him on a pedestal. I read an article stating that Mike “doomer” Ruppert sexually harassed one of his workers, and another where he predicted the US economy would collapse no later than July of last year. What a delusional paranoid nutcase he is, just like other peak oilers.
The main reason that the US economy is declining is because a socialist Kremlin-backed movement has infiltrated the US government. As soon as we vote out Mr. Obambam and install a conservative American in office, the US will get back on track and return to its former glory. A true American would lift all the EPA regulations and let us drill, baby, drill ’til we become energy independent. It’s all about optimism; It’s the American way. Here’s another video link that scientifically disproves peak oil: http://www.youtube.com/watch?v=isRIMZi0SB0
BillT on Mon, 13th Feb 2012 1:34 am
Isaiah, I give you one thing…you don’t back down even if you are wrong. Good luck! ^_^
Isaiah on Mon, 13th Feb 2012 3:27 am
I’m just kidding, ya’ll. I’m being satirical. I know that peak oil is an irrefutable fact. Honestly, I’m just sick of the stupidity of average Americans, although I am an American myself who lives in the Southern Bible Belt of the USA. God help me. Did you all think I was actually being serious? 😉
Tomgood on Mon, 13th Feb 2012 7:54 am
Isaiah for pres.
BillT on Mon, 13th Feb 2012 10:10 am
Ok, you got me, Isaiah. I apologize if I insulted you, but you asked for it. There are far too many in the US that think like you were pretending to think. Our education system has failed and too many do not understand science. That is just what our ‘leaders’ want. Serfs that just know enough to work, and not question or revolt.