Sunday, December 11, 2011

America's New Energy Security from Tight Oil


Daniel Yergin in Monday's WSJ, "America's New Energy Security":

"Every president since Richard Nixon has called for energy independence. Nevertheless, U.S. reliance on imported oil long seemed to be headed in only one direction—up—and that pointed to inevitably increasing dependence on the huge resources of the Middle East.

No longer. U.S. petroleum imports, on a net basis, reached their peak—60%—of domestic consumption in 2005. Since then, they have been going in the other direction. They are now down to 45.6% (see chart above, data here).

The big surprise is onshore [production], where the United States is experiencing an oil boom. The reason is the sudden appearance of a new source, "tight oil," which is extracted from dense rocks. For years, tight oil has been a very marginal business. In 2000, it was only about 200,000 barrels per day, 3% of total output. Today it is about a million barrels per day. By the end of the decade it could reach three million barrels per day, over half of current domestic crude oil production.

The dramatic increase in tight oil has been made possible by the same technology combo, hydraulic fracturing and horizontal drilling, that created the "shale gale"—the explosive growth in natural gas production from shale rock.

Just a few years ago the expectation was that the U.S. would be importing large volumes of natural gas and becoming heavily dependent on world markets—and spending upward of $100 billion a year for those imports. Now people, including President Obama, talk about a hundred-year supply of domestic natural gas. Shale gas has also proved to be a job creator—over 600,000 jobs.

Oil extracted from shale also means lower imports, a lower bill for these imports, and substantial job creation. Thanks to tight oil, North Dakota is now America's fourth largest oil-producing state after Texas, Alaska and California. It may well move up to third or even second place (MP: This will likely happen within the next few months).

The shift in oil sources means the global supply system will become more resilient, our energy supplies will become more secure, and the nation will have more flexibility in dealing with crises. It would also mean that economic benefits—in terms of jobs, manufacturing and services—would register on the ground in North America.

The most recent United Nations report on Iran's nuclear program, along with the call by French President Nicolas Sarkozy for an embargo on oil imports from Iran and possible sanctions on Iran's central bank, have raised the stakes. The Iranians have responded by again brandishing the threat to close the Strait of Hormuz, and by ransacking the British Embassy in Tehran.

Thus, over the next few years, new supply in North America becomes all the more important as a potential offset to rising tensions with Iran in the global oil balance. This gives new urgency to assuring that North America's oil resources are developed to what is now their much-greater potential."

24 Comments:

At 12/11/2011 11:17 PM, Blogger Mkelley said...

Obama and the rest of the left are trying their best to stop domestic production. They do exactly what the Sierra Clubbers want, and they couldn't care less about jobs or energy production.

 
At 12/12/2011 1:54 AM, Blogger Benjamin said...

America's fossil fuel boom will probably spread globally. They'll be doing the horizontal fracking dance everywhere.

In addition, there are enormous and untapped fossil deposits in Iraq and Venezuela.

40 mpg is the new 20.

Making predictions is hard, especially about the future.

Peak Oil is a dud.

 
At 12/12/2011 7:05 AM, Blogger Larry G said...

when we talk about "independence" how is it bounded?

some say it's US borders only while others say North America and still others... Western Hemisphere sans Venezuela/Cuba.

it's sort of a dumb concept in a way, if you think about it since the vast majority of countries in the world do not see "energy independence" in the same way that we seem to.

and it's even dumber when we exclude all sources of energy except for fossil fuels....

and the concept of "energy independence" as applied to electricity from coal/nuke seems to not be included in the concept either...

the day when fossil fuels are no longer sufficient to power a country without other sources is probably far away in the future and may never come if stuff that uses fossil fuels becomes more and more efficient and/or switches to other fuels like electricity.

p.s. " Obama and the rest of the left are trying their best to stop domestic production."

not in North Dakota, eh?

 
At 12/12/2011 8:12 AM, Blogger Ed R said...

Isn't it great that the enlightened energy policy of the Obama administration is achieving such outstanding results.

I am sure Mark and other commenters will want to generously give the credit where credit is so clearly overdue.

 
At 12/12/2011 8:49 AM, Blogger Rufus II said...

Two things happened that you didn't mention:

1) We went through a horrible recession Vehicle Miles Driven are still down substantially - and falling - from 2005

2) About a Million Barrels/Day of Biofuels (Ethanol, and Biodiesel) came online from 2005 to the present.

 
At 12/12/2011 8:53 AM, Blogger Rufus II said...

There's not a "Driller" in the country that expects "fracced" oil to be TWO million barrels/day in 2020, much less 3 million. The wells just flat deplete too rapidly for that to happen.

I don't know why you're doing this, but you're misleading a lot of good people with fairy tales. It's not just wrong; it's Dangerous.

 
At 12/12/2011 10:25 AM, Blogger juandos said...

"About a Million Barrels/Day of Biofuels (Ethanol, and Biodiesel) came online from 2005 to the present"...

Hey rufus, any idea what that million barrels cost the taxpayers?

The departments of Agriculture and the Navy announced plans Monday to buy 450,000 gallons of non-food biofuels -- at a cost of $16 per gallon -- in what will be the largest federal purchase of biofuels in U.S. history...

 
At 12/12/2011 11:07 AM, Blogger Benjamin said...

Juandos-

Our two most wasteful federal agencies: USDA and Defense. I am not surprised, even less so that they are funneling money into rural districts.

When will you GOP'ers way up and small the coffee?

We run federal deficits due to outlays to rural states and districts.

 
At 12/12/2011 12:08 PM, Blogger Rufus II said...

Actually, that Million Barrels/Day didn't "cost" us anything. It has, however, Saved us Tens of Billions, at the minimum.

As for that Navy purchase, the DOD is trying to help nurture a nascent industry that they hope, in the future, can be instrumental in weaning the Navy off of a Globally Declining Oil Supply.

 
At 12/12/2011 12:12 PM, Blogger Rufus II said...

BTW, in spite of the Blender's Credit going away on Jan 1, the front month ethanol contract is $2.10/gallon.

 
At 12/12/2011 12:59 PM, Blogger Che is dead said...

"The departments of Agriculture and the Navy announced plans Monday to buy 450,000 gallons of non-food biofuels -- at a cost of $16 per gallon -- in what will be the largest federal purchase of biofuels in U.S. history..." -- jaundos

That story was missing this little detail:

You won’t be surprised to learn that a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, the California company that is selling a portion of the biofuel to the Navy. Glauthier worked on the energy-sector portion of the 2009 stimulus bill. The Navy sale isn’t Solazyme’s first trip to the public trough, of course. The company got a $21.8 million grant from the 2009 stimulus package.

-- Hot Air

 
At 12/12/2011 1:24 PM, Blogger Rufus II said...

Of course, I noticed no one mentioned the $400.00/Gallon fuel that we're airlifting in to our troops in Afghanistan.

 
At 12/12/2011 2:34 PM, Blogger Jet Beagle said...

Rufus II: "About a Million Barrels/Day of Biofuels (Ethanol, and Biodiesel) came online from 2005 to the present."

According to the Energy Information Administration, biofuels in 2010 accounted for 1.2% of total U.S. energy consumption. Biofuels are a meaningless blip.

All renewable energy sources - including biofuels, wind, solar, and hydroelectric - made up 8.0% of total U.S. energy consumption. Here's an interesting comparison:

Share of U.S. energy consumption

1981-1985
nuclear..........4.5%
fossil fuels....87.3%
renewables.......8.2%

2005-2010
nuclear..........8.5%
fossil fuels....84.1%
renewables.......7.4%

Source: U.S. Annual Energy Outlook 2011

 
At 12/12/2011 2:52 PM, Blogger Jet Beagle said...

Please note that the chart represents the NET import percentage of total petroleum consumption. It says nothing about gross imports and nothing about total energy consumption.

Total petroleum imports - barrels per day, not percentages - are actually at the same level as a decade ago. What has changed in ten years is that petroleum exports have nearly tripled, from 1.0 million barrels per day to 2.7 million barrels per day.

 
At 12/12/2011 3:26 PM, Blogger Rufus II said...

An Excellent Assessment of Bakken/Alaskan Oil Production

The Best I've read.

 
At 12/12/2011 7:13 PM, Blogger Craig said...

Of course, I noticed no one mentioned the $400.00/Gallon fuel that we're airlifting in to our troops in Afghanistan.

Perhaps because expensive Pentagon decisions have so little to do with the economics of drilling for oil in the United States.

It's certainly worthy of some good comments -- just not on this post.

 
At 12/12/2011 7:53 PM, Blogger Rufus II said...

About as relevant as the Navy's biofuel purchase, I suppose.

You see, one thing the DOD is interested in is "how to use local biomass to produce energy for deployed troops."

 
At 12/12/2011 9:10 PM, Blogger juandos said...

"When will you GOP'ers way up and small the coffee?"...

GOP'ers? Did you mean gophers?..

Small the coffee?!?! You mean like a cup of expresso or something similer?

Gophers are rather small animals so maybe a small cup of coffee will do for them...

BTW why do you keep repeating n the same silly BS since its been deebunked dozens of times?

Are you Californians suffering from sort of congenital defect that impedes your ability to get a grip on reality?

 
At 12/12/2011 9:26 PM, Blogger juandos said...

"Actually, that Million Barrels/Day didn't "cost" us anything. It has, however, Saved us Tens of Billions, at the minimum"...

You of course have something credible to link to that explains supposed savings, right rufus? You seem to have a handle on this stuff...

BTW this is a paper put out in 2006 titled: BIOFUELS - AT WHAT COST ?
Government support for ethanol and biodiesel in the United States


What I'm finding out rufus is that 'subsidies' seems to cover a multitude of actions beyond mere money...

Here's a sample of what I'm talking about: Not just cash. Government subsidies are often thought of as cash payments from a government to a private individual or firm.While cash grants are subsidies, there are many other more complex methods that governments use to transfer value to the private sector. These include reduced tax rates; government-provided loans or insurance at below-market rates; guarantees on private loans; special requirements or bans that affect either biofuels or their substitutes; and surcharges or tariffs on competing products.While the details of these approaches can, and do, vary widely, all are used to some degree to subsidize ethanol and biodiesel in the United States.

 
At 12/12/2011 9:38 PM, Blogger juandos said...

re: Bakken/Alaskan Oil Production

Yes indeed rufus, a very good article with some insightful and informative comments also...

Thanks for the link...

 
At 12/13/2011 12:03 AM, Blogger Rufus II said...

Here, Juandos

 
At 12/13/2011 4:30 PM, Blogger juandos said...

Good man rufus, thanks for that link to The Impact of Ethanol Production on US and Regional Gasoline Markets: An Update to May 2009...

Looks interesting...

 
At 12/16/2011 3:25 AM, Blogger dandyone said...

rufus and juandos... thanks for the compliments

-Author of the Bakken article

 
At 12/16/2011 3:25 AM, Blogger dandyone said...

rufus and juandos... thanks for the compliments

-Author of the Bakken article

 

Post a Comment

Links to this post:

Create a Link

<< Home