Fracking: The Gift that Keeps Giving
Not only has fracking revolutionized natural gas production so that we now have enough natural gas to last 100 years, fracking has also allowed production of crude oil from shale, thereby potentially transforming the United States from being an importer of oil to one that’s self sufficient in oil sometime in the 2020s.
In addition, fracking also spins off additional liquids from the production of natural gas.
Natural gas liquids (NGLs) are the icing on the cake from fracking.
As mentioned earlier (see Foiling OPEC), the United States currently produce about 6 million barrels of oil per day (mbd) with Canada producing an additional 2 mbd.
We have the technically recoverable reserves to allow the United States to produce 10 mbd and Canada to produce 6 mbd – in other words, we can double our combined output to 16 mbd.
NGLs can add another 2 mbd by 2020, to bring the total of all liquids to 18 mbd.
Mexico has the potential to add to these amounts, but current conditions, legal and otherwise, cloud the picture as to whether Mexico can actually increase output.
It’s important to remember that this forecast can only become a reality if we allow drilling in all the areas that are now off-limit to drilling – ANWR, federal lands and the outer continental shelf.
Today, we must rely on Saudi Arabia to take-up the slack for any decrease in Iranian oil production: Unfortunately this won’t change until we are well on our way to doubling our oil output.
We are blessed with huge reserves of oil and natural gas. There is conventional oil, and shale oil, which can allow us to produce 18 mbd. There is also the very tight shale in Colorado, Utah and Wyoming that has the potential to add another reserve that, by itself, is greater than Saudi Arabia’s oil reserves.
In ten years, fracking will have led to reducing our current account deficit. Canada could remain the major beneficiary of payments from us, for oil.
In addition to reducing payments to other countries for their oil, our state and federal governments will reap higher taxes and royalty payments for the oil we produce in the United States.
Fracking has created the glut in natural gas which has the chemical industry bringing jobs back to the United States. Only Qatar might have lower cost natural gas than the United States.
The glut in natural gas has also lowered energy costs to industry, such as the steel industry, making the United States more competitive in the world market.
In addition, we can export refined petroleum products that can create additional jobs. We may even be in a position to export crude oil if the government allows it.
Perhaps, fracking’s greatest gift has been to make us aware that it’s possible to achieve energy independence.
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