Tuesday, July 17, 2012

America's Revolutionary Energy Bonanza

Walter Russell Mead weighs in with some profound insights on America's huge, game-changing, job-creating, energy bonanza:

"Forget peak oil; forget the Middle East. The energy revolution of the 21st century isn’t about solar energy or wind power and the “scramble for oil” isn’t going to drive global politics. The energy abundance that helped propel the United States to global leadership in the 19th and 2oth centuries is back; if the energy revolution now taking shape lives up to its full potential, we are headed into a new century in which the location of the world’s energy resources and the structure of the world’s energy trade support American affluence at home and power abroad.

By some estimates, the United States has more oil than Saudi Arabia, Iraq and Iran combined, and Canada may have even more than the United States. A GAO report released last May (pdf link can be found here) estimates that up to the equivalent of 3 trillion barrels of shale oil may lie in just one of the major potential US energy production sites. If half of this oil is recoverable, US reserves in this one deposit are roughly equal to the known reserves of the rest of the world combined.

Domestically, the energy bonanza changes the American outlook far more dramatically than most people yet realize. This is a Big One, a game changer, and it will likely be a major factor in propelling the United States to the next (and still unknown) stage of development — towards the next incarnation of the American Dream.

The energy revolution is first and foremost a revolution that affects jobs. We are in the very early stages, but since the financial crisis of 2008, fracking alone has created something like 600,000 new jobs in the United States, says the FT. Throw in more jobs in both extracting and refining the new energy wealth, and add the manufacturing and processing industries that will return to US shores to benefit from cheap, secure and abundant energy and feedstock, and it is clear that the energy revolution will be a jobs revolution.

These jobs pay well; for the first time in a generation we are looking at substantial growth of high-income jobs for skilled blue collar workers. Some of these jobs, especially with overtime, will pay in the six figures; most offer wages well above the national blue collar average.

Nature — or perhaps Nature’s God — seems to love mocking pundits. Just when the entire punditocracy, it sometimes seemed, had bought into the “American decline” meme, Europe collapsed and huge energy reserves were discovered underneath the United States. The “special providence” that observers have from time to time discerned in America’s progress through history doesn’t seem to be quite finished with us yet.

Getting the new oil and gas raises complicated technical and environmental issues, and it may take some time before the dust settles and we understand exactly what we are looking at here. And drilling is a notoriously uncertain business. The energy revolution may fall short of the full hopes it stirs up. Yet the rapid progress of extraction technology is making these unconventional reserves look more real and more ‘gettable’ all the time. Rather than coping gracefully with the consequences of inevitable decline, America’s job in the 21st century looks like handling its new set of opportunities wisely and well."

HT: Matt B.

6 Comments:

At 7/18/2012 12:41 AM, Blogger Benjamin said...

When will the GOP call for eliminating ethanol?

Seems like a bad idea getting worse--and it mandated, and subsidized.

The very picture of socialism and government diktat ruling over business and consumer free choice.

Romney?

Anyone?

 
At 7/18/2012 6:05 AM, Blogger gasminder said...

The type of shale oil being described in the linked report should NOT be confused with the currently active "oil shale" plays such as the Bakken and Eagleford. The Green River oil shale is an entirely different beast requiring entirely different technologies to recover. Those technologies are still far from economic at current prices and have significant environmental and technological hurdles yet to overcome. Furthermore recovering "half of the reserves in place" is extremely difficult in the best conventional reservoirs. Doing so in these shales is extremely unlikely.

 
At 7/18/2012 6:22 AM, Blogger JJ Butler said...

Bakken and other tight oil recovery rates are currently in the single digit percents. With technological advances the hope is to double or triple that over time. This 'shale oil' referenced (not 'oil shaile') is a different animal. Recovery rates of 50%? Not enough water is in lake Michigan to get you to 5%! Never let an economist talk about natural resources. They always ignore the science and forget about price!

 
At 7/18/2012 9:36 AM, Blogger Che is dead said...

"Maybe Che will someday comment about ethanol, the GOP moonshine that is our nation's largest renewable, sustainable, and socialized program, by far." -- "Benji"

The biofuels industry is at loggerheads with House Republicans, who are eyeing its funding for elimination in the farm bill. Biomass and biofuels groups warn that the loss of $800 million in guaranteed federal support would stall progress in developing the fuel source and cause job losses in rural communities that can least afford it ... While the [Democrat controlled] Senate farm bill included mandatory funding of $800 million over five years for energy programs, the House bill offers only discretionary spending on energy programs, while cutting $500 million from the funding level in the 2008 farm bill. House Republicans say the plans to choke off funding for biofuels and biomass projects reflect the basic fiscal reality that cuts have to come from somewhere. -- The Hill

 
At 7/18/2012 11:05 AM, Blogger LogicaLunatic said...

Facts Based On 2011 Data
The world consumes 31,755,000,000 barrels of oil per year (31.7 Billion Barrels)
The US consumes 7,117,500,000 barrels of oil per year (7.1 Billion Barrels [22% of World Production])


Gulf of Mexico Reserves
Discovered: 2006
Size: 7 – 15 Billion Barrels
Could keep world economy running for: 3 to 6 months.
Could keep US economy running for: 1 to 2 years.
Largest oil resource discovered since Prudhoe Bay.

Prudhoe Bay
Discovered: 1968
Size: 10 – 25 Billion Barrels
Actual Production To Date: 11 Billion Barrels
Remaining Reserves: 2 Billion Barrels

Alaska National
Wildlife Reserve (ANWR)
Latest Estimates: 1998
Size: 5.7 – 16 Billion Barrels
Could keep world economy running for: 2 to 7 months.
Could keep US economy running for: 1 to 2 years.

North Dakota Tight Oil (Bakken)
The average tight oil well, over its lifetime, produces roughly 150 barrels of oil per day.
The average tight oil well will only produce 550,000 barrels of oil in its lifetime.
The lifetime oil production from a single tight oil well can keep the world running for: 9 minutes.
The lifetime oil production from a single tight oil well can keep the US running for: 40 minutes.
The Deepwater Horizon could have produced that much in 100 days if
it hadn’t exploded.
THE WORLD CONSUMED AS MUCH OIL IN THE LAST 22 YEARS AS IT DID IN THE 200 YEARS BEFORE THAT.

 
At 7/18/2012 2:11 PM, Blogger VangelV said...

LOL...

Did anyone look at what the GAO was touting? We got the same old oil shale promise that we have heard for the better part of a century. What you need is economic hydrocarbon reserves, not hydrocarbons that take more energy to extract than they contain.

And this is why Mark lacks credibility on this subject; he cherry picks every little claim that supports his story while he ignores the fact that the very shale gas story that he was hyping led to massive capital destruction as producers wound up selling their product for less than cost for several years and had to keep borrowing in order to stay afloat. The world needs rational thinkers who discuss reality, not naive optimists who ignore what reality is showing us.

 

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