Monday, October 31, 2011

Pendulum Swings on American Oil Independence

From Ed Crooks, writing in the Financial Times:

"Along with oil booms that are under way or expected across North America, from Alberta to Texas, is a development that holds profound implications for the economy of the US and its status as superpower. In prospect is energy independence – a decades-old dream of American politicians of all stripes. 

“Over the past couple of years, there has been a great U-turn in US oil supply,” says Daniel Yergin of IHS Cera, the research group. “Until recently, the question was whether oil imports would flatten out. Now we are seeing a major rebalancing of supplies.”

Many analysts expect that in the coming decade the US will leapfrog Saudi Arabia and Russia to become the world’s largest producer of liquid hydrocarbons, counting both crude oil and lighter natural gas liquids such as propane and ethane. That optimism reflects the increasing flow of “tight oil” as well as gas from shale – rock formations holding reserves unlocked through new extraction technologies.

Hydraulic fracturing (pumping a mix of water, sand and chemicals underground at high pressure to crack the rock) and long-reach horizontal drilling (sending wells up to a mile sideways and more than a mile below the surface) have transformed US gas production, opening up reserves some estimate will last 100 years. Now these techniques, used in places such as North Dakota, are having a similar impact on oil output. Already, America has cut the share of its oil consumption met by imports from more than 60 per cent in 2005 to 47 per cent last year (see chart above)."


5 Comments:

At 10/31/2011 8:42 PM, Blogger aldom said...

While the story is uplifting, the unfortunate truth seems to be that virtually ALL of the percentage decline in the import component is the result of decline in demand. Were our national demand to retunr to 2004 /2005 levels, the percentage of imported oil would also approach 60%.
We need a shift in Govt policy to make the headline come true.

 
At 11/01/2011 4:32 AM, Blogger Rufus II said...

Don't overlook the Million + Barrels/Day of Ethanol, and Biodiesel we've added.

 
At 11/01/2011 11:06 AM, Blogger VangelV said...

What a bunch of nonsense. Of course you need less imported oil. When the real economy has contracted and hundreds of billions have been spent to produce a lot of oil and gas at a loss you expect imports to go down. Why is this supposed to be good news?

 
At 11/04/2011 2:27 PM, Blogger LeftLibertarian said...

Yes, this is rose-colored glasses optimism. It is certainly good that our dependence on foreign oil has gone done. However, it has largely gone down since:
1) Consumption has dropped and not grown due to economic collapse. So are we cheering on economic collapse? Yeah collapse!
2) Much higher energy prices made more domestic field economically viable for drilling. So we are cheering on high energy prices? Yeah high gas prices!

Hey, if oil his $250/barrel maybe should have a really big party because the amount of oil imports will be even much lower than now! There will be less consumption and more domestic production Woo-hoo! Bring on $250/barrel oil and all will be great!

(Sarcasm)

 
At 11/04/2011 2:34 PM, Blogger VangelV said...

Hey, if oil his $250/barrel maybe should have a really big party because the amount of oil imports will be even much lower than now! There will be less consumption and more domestic production Woo-hoo! Bring on $250/barrel oil and all will be great!

(Sarcasm)


The sad part is that at $250/barrel the cost of most shale liquids will still be too high to make a profit. Other than the best spots in the best formation the hydrocarbons in the rest consumes more energy to produce, gather, and transport than it contains. The only way to be optimistic is to be really bad at math and logic.

 

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