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Enough Oil for Independence?

July 20, 2012

Do we have enough oil to become independent from OPEC?

The answer isn’t straight forward because there are differing estimates of oil reserves.

The oil industry readily accepts the definition of proven reserves as being, “Proven reserves, those with a reasonable certainty (90%) of being recoverable.”

But the USGS uses two other definitions:

  • Technically recoverable resources: all resources that may be recoverable using current techniques without regard to cost.
  • Economically recoverable resources: those technically recoverable resources for which the costs of development, including profit, can be recovered.

There is also the problem of defining the type of oil.

There is conventional oil, as produced by conventional drilling, including the use of enhanced oil recovery techniques, such as water or CO2 injection.

Next there is unconventional oil, which is oil derived from shale using fracking. The Bakken formation is an example. Canadian tar sands are also frequently included under this definition.

Third, there is shale oil, which can be produced from the Green River formation in Utah, Wyoming and Colorado. This is actually Kerogen that’s more expensive to refine. It’s unproven whether this can be extracted using fracking, but Shell has demonstrated it can be extracted using an in-situ heating process. A Rand report established a midpoint of recoverable reserves of 800 billion barrels, “more than triple the proven oil reserves of Saudi Arabia.”

So how can we determine whether the United States can become independent from foreign, other than Canada, or OPEC oil?

The EIA estimates that the United States only has 21 billion barrels of proven oil reserves.

This is nowhere near enough oil to allow the United States to become independent from foreign oil.

Canada is reported to have proven oil reserves of 175 billion barrels.

Combining US and Canadian proven reserves, and then dividing by US and Canadian annual consumption, the total reserves would last for less than 30 years without imports from other foreign countries.

But proven reserves are only a fraction of the amount of oil that is probably available.

The EIA estimates that technically recoverable reserves of conventional oil are 198 billion barrels, roughly 9.4 times the proven reserves of conventional oil.

Therefore, the question of undiscovered reserves also becomes an important part of the overall equation.

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) estimated there are 86 billion barrels of undiscovered conventional oil in the Outer Continental Shelf. This can be added to the EIA estimate.

The USGS in its latest assessment indicates that Canada has 84 billion barrels of undiscovered oil.

It’s also why the recent improvements in technology, e.g., fracking, are so important.

For example, the USGS increased its estimate of technically recoverable unconventional oil from the Bakken formation from 151 million barrels in 1995 to around 4 billion barrels in 2008, which is 25 times the 1995 estimate.

The above estimates do not include natural gas liquids (NGLs) associated with the production of natural gas, that are equivalent to 29% of total worldwide undiscovered oil, not including the United States. Based on current data, NGLs would increase our oil production by around 10%.

On the basis of proven reserves in the United States and Canada, plus the undiscovered conventional oil in the United States and Canada, plus the increased amount of oil from unconventional sources, such as the Bakken formation, we can be reasonably assured we have enough oil in North America to last 100 years.

Add to this the 800 billion barrels potentially available from shale in Utah, Wyoming and Colorado and it becomes clear that we have the necessary oil to become independent from OPEC oil for possibly 200 years.

What’s needed is the political will to open up all the areas where the government currently prevents us from drilling

 Note:

Oil Shale Development in the United States, RAND Corporation, for the National Energy Technology Laboratory of the U.S. Department of Energy, 2005

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9 Comments leave one →
  1. July 20, 2012 2:18 pm

    Donn,

    Thanks for the rest of the story! Has anyone done an estimate of Proven reserves using a 70% confidence level vs a 90% one for “being recoverable?”

  2. July 20, 2012 3:03 pm

    Not that I’m aware of.
    The next commonly defined reserve category is, “Probable reserves, those attributed to known accumulations and that have at least a 50% chance of being recoverable.”
    I don’t know whether there is a quantity assigned to this category.

  3. July 23, 2012 11:06 am

    The author is wrong to suggest that shale oil is kerogen. Kerogen is solid organic matter that is not soluble in traditional petroleum solvents. It is the source of all oil and is present in the Bakken and Eagle Ford and other source rock formations that yield oil or gas upon tracking. Fracking will not enable production of shale oil from oil shale, as there is not liquid petroleum in the oil shale. Some say this makes oil shale a misnomer, but if it does, then wine grapes would also be misnomer. Oil shale must be heated to pyrolysis temperatures, generally at least 300°C to produce liquids and gas.

    Anyone who only cites Shell’s method of in situ extraction of shale oil from oil shale is five to six years behind the times, like to Rand Report, although its estimate of the potential production is as good as any around. A more up-to-date view of the oil shale industry in this decade is available in the proceedings of the Oil Shale Symposium, held every year in Golden Colorado, and posted at: http://www.costar-mines.org/oil_shale_symposia.html

    The USGS is about to release a comprehensive profile of the richness of Green RIver Formation oil shale, but this still will not give a true estimate of the reserves. That must await a more careful analysis of the various options available, and their applicability to portions of the resource. This is likely to be a number of years away, and will only be published if some public entity chooses to fund effort to make the estimate. Otherwise, only the proprietary estimates of companies engaged will be available for some time to come. The USGS estimate is likely to reduce some of the hype surrounding oil shale, as it will show that about two thirds of the total resource lies in rocks that are not likely to be economically producible until significant advances have been made in the technology.

    Jeremy Boak, Director
    Center for Oil Shale Technology and Research
    Colorado School of Mines
    Golden CO
    Viewpoints are mine, not positions of the Colorado School of Mines

  4. July 23, 2012 12:57 pm

    Jeremy:
    Thanks. I have a great deal of respect for the Colorado School of Mines and agree with the comment re Kerogen. It’s used in this instance to differentiate it from crude oil, such as is found in the Bakken field.
    I’m fully aware that the Rand study is several years old, but that doesn’t mean it’s wrong. In fact, you mention the same 800 billion barrels in your bio on the COSTAR web site.
    Similarly, Shell had an experimental demonstration site in Colorado before shutting it down. They proved to their satisfaction that the in-situ process could profitably produce oil.
    The Secretary of the Interior placed shale development in Colorado off-limits, which I suspect, is why Shell moved on.
    I’ll be very interested in seeing what the USGS says about shale oil development in the Green River formation and hope you will make me aware of when the study is published.
    Let’s return to the focus of my article. We have more than enough oil to last for 100 years, and oil shale would merely increase our ability to achieve energy independence.
    Donn

    • July 25, 2012 11:11 am

      The distinction would be better made by referring to the Bakken Formation as oil-bearing shale to indicate that the rock contains actual oil, and to the product as shale-hosted oil. The need exists for a term for both the rock and the product (as in gas shale and shale gas), and priority for the terms oil shale and shale oil goes to the stuff you have to cook. Using the word kerogen is a fundamental technical error, as I pointed out.

      I do find that the press, financial, and even industry communities are desperate to have a two word term like gas shale, so they are now using tight oil. I have never seen any oil that looked tight, so I presume they are shortening tight-rock oil to tight oil. The financial community seems comfortable with Mortgage-Backed Securities and Default Rate Swaps, so I don’t know why three words to clarify the nature of these complex suites of rocks is too much. Perhaps I should add another word so that everyone, especially in Washington, can turn it into an acronym.

      Shell finished their first test in Colorado and are now gearing up for another. I do not know what your source is for saying they have moved on; it certainly did not come from Shell or any other informed source. Nor is it true that oil shale development has been shut down by Washington. It is true that the most recent Programmatic Environmental Impact Statement needlessly restricts availability of land, especially in the richest part of the resource, and that strongly limits interest of any new players, but work continues on existing leases. ExxonMobil is very active on their own land while they await the admittedly glacial pace of review of their RD&D application. AMSO is currently awaiting repair of a failed heater for their test in Colorado.

      While the main thrust of the article is true, the citation of outdated or erroneous information about oil shale is prejudicial to a nascent industry. You fail to even mention the two projects likely to begin production in the next 2-5 years, those of Red Leaf Resources and Enefit, both operating mainly on non-Federal land in Utah, with a solid support from the state government.

      I certainly appreciate your pointing out that my website bio is out of date, though! I believe the bio came from an even older website. The need to keep web information up-to-date is constantly brought to my attention, although grants don’t support doing that. And I will certainly keep reading, as the place of oil shale in the broader context of energy supply is extremely important. I would also like to extend the offer of a complimentary registration for the 32nd Oil Shale Symposium here at Mines, as I would like to feel there was one commentator out there who had an up-to-date view of where the oil shale industry is and will be. You can get details at: http://www.csmspace.com/events/oilshale2012/

  5. July 26, 2012 3:47 pm

    I’m very interested in attending the 32nd Symposium in October. I can’t commit now because of several other trips I am taking between now and then.
    With respect to government interference, a February 26, 2009 WSJ article said that Salazar had withdrawn leases for development. I’m not sure whether he has changed his mind, but in so far as I know, the government did stop development on federal land in Colorado.
    A compatriot of mine travels to Alberta each year to stay abreast of developments in Canada, and I’m always interested in what he learns.
    I have been watching the development of tar sands with such processes as SAGD and also radio frequency heating. Canada seems intent on in-situ production. This would seem to me to have advantages over mining and then heating for extraction, which some of the other oil shale processes seem to utilize.
    I’m open to new information, and would like to see the technologies for developing oil shale being proven over the next decade or two, so that oil shale can assume a role in our energy equation later in this century.
    Hopefully, the Center for Oil Shale Technology and Research at Mines can play a leadership role in this effort.
    Donn

    • July 26, 2012 4:19 pm

      If that time in October does work out, email me at jboak@mines.edu to get the appropriate link for press complimentary registration. Also, do look at Red Leaf Resources, whose surface process at least makes extensive efforts to minimize impact.

      The Salazar cancellation of oil shale leasing was of a call for RD&D lease applications released toward the end of the Bush Administration. They redid the call, and sent it out in November 2009. Two of the three lease applications they received are still grinding through the Federal mill. The technical review was done in May of 2010, they were forwarded for Environmental Assessment in October 2010. The Environmental Assessments were completed very recently, four months behind schedule.

  6. July 26, 2012 5:10 pm

    Ok, Thanks.
    Donn

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