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Page added on March 30, 2012

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US Might Have More Oil Resources Than Saudi Arabia, But…

Production

The Difference Between Oil Shale and Oil-Bearing Shale

People are often confused about the overall extent of U.S. oil reserves. Some claim that the U.S. has hundreds of billions or even trillions of barrels of oil waiting to be produced if bureaucrats will simply stop blocking development. In fact, in a recent debate between Republican candidates contending for Gabrielle Giffords’ recently vacated House seat, one candidate declared “We have more oil in this country than in Saudi Arabia.” So, I thought it might be a good idea to elaborate a bit on U.S. oil resources.

Oil production has been increasing in the U.S. for the past few years, primarily driven by expanding production from the Bakken Shale Formation in North Dakota and the Eagle Ford Shale in Texas. The oil that is being produced from these shale formations is sometimes improperly referred to as shale oil. But when some people speak of hundreds of billions or trillions of barrels of U.S. oil, they are most likely talking about the oil shale in the Green River Formation in Colorado, Utah, and Wyoming. Since the shale in North Dakota and Texas is producing oil, some have assumed that the Green River Formation and its roughly 2 trillion barrels of oil resources will be developed next because they think it is a similar type of resource. But it is not.

Although the oil in the Bakken and Eagle Ford is being extracted from shale formations, the term shale oil has been used for over 100 years to describe a very different resource. This has led some to confusion over the differences between current production in North Dakota and potential production in Colorado. The oil in the Bakken and Eagle Ford formations actually exists as oil, but the shale does not allow the oil to flow very well. This oil is properly called “tight oil“, and advances in hydraulic fracturing (fracking) technology have allowed some of this oil to be economically produced. (For more details, I discuss resources, reserves, fracking, shale gas, and oil shale in some detail in my new book Power Plays: Energy Options in the Age of Peak Oil).

The estimated amount of oil in place (the resource) varies widely, with some suggesting that there could be 400 billion barrels of oil in the Bakken. Because of advances in fracking technology, some of the resource has now been classified as reserves (the amount that can be technically and economically produced). However, the reserve is a very low fraction of the resource at 2 to 4 billion barrels (although some industry estimates put the recoverable amount as high as 20 billion barrels or so). For reference, the U.S. consumes a billion barrels of oil in about 52 days, and the world consumes a billion barrels in about 11 days.

Like the Bakken, the Eagle Ford formation in Texas consists of oil (and natural gas) in tight formations that is being accessed via fracking. The amount of technically recoverable oil in the Eagle Ford is estimated by the U.S. Department of Energy to be 3.35 billion barrels of oil.

Without a doubt, these two formations are a major factor in the current resurgence of U.S. oil production. But the Green River formation is the source of talk of those enormous oil resources — larger than those of Saudi Arabia — and it is a very different prospect than the tight oil being produced in North Dakota and Texas. The oil shale in the Green River looks like rock. Unlike the hydrocarbons in the tight oil formations, the oil shale (kerogen) consists of very heavy hydrocarbons that are solid. In that way, oil shale more resembles coal than oil. Oil shale is essentially oil that Mother Nature did not finish cooking, and thus to convert it into oil, heat has to be added. The energy requirements — plus the fact that oil shale production requires a lot of water in a very dry environment — have kept oil shale commercialization out of reach for over 100 years.

Thus, while the U.S. might indeed have greater oil resources than Saudi Arabia, U.S. oil reserves (per the BP Statistical Review of World Energy) are only about 1/10th those of Saudi Arabia. The distinction is important.

Summarizing the Definitions

To summarize, let’s review the definitions for the important terms discussed here:

Oil resource — the total amount of oil in place, most of which typically can’t be recovered

Oil reserve — the amount of oil that can be recovered economically with existing technology

Oil shale — sedimentary rock that contains solid hydrocarbons called kerogen (e.g., Green River Formation)

Shale oil — the oil that can be obtained by cooking kerogen

Tight oil — liquid hydrocarbons that are obtained by hydraulic fracturing of shale formations (e.g., Bakken Formation and Eagle Ford Formation)

Conclusion: Resources are not Reserves, and Tight Oil isn’t Shale Oil

It is pretty clear that at current oil prices, developments in the tight oil formations will continue. It is not at all clear that even at $100 oil the shale in the Green River formation will be commercialized to produce oil, although a number of companies are working on it and will continue to do so. Oil shale is commercially produced in some countries like Estonia, but it is primarily just burned for power.

In order to commercially convert the oil shale into oil, a more energy efficient method of producing it must be found (or, one would have to have extremely cheap energy and abundant water supplies to drive the process). I have heard from multiple industry sources that the energy return for producing oil from oil shale is around 4 to 1 (lower than for oil sands production), and that is before refining the oil to finished products. At this sort of energy return, oil sands will continue to be a more economical heavy oil option.

Thus, my prediction is that despite having an oil shale resource that may indeed be far greater than the oil resources of Saudi Arabia, the reserve will continue to be close to zero for the foreseeable future because there are still many technical hurdles to overcome to realize a scalable, commercially viable process.

Finally, I would say that if a commercially viable process for shale oil production from the Green River oil formation is developed, the environmental blowback will be enormous. The production of shale oil is more energy intensive (i.e., has higher carbon emissions) than for the oil sands, it has a high water requirement in a dry climate, and it is potentially a huge new source of carbon dioxide emissions.  The environmental protests that would arise in response to a growing commercial shale oil operation would make the Keystone XL pipeline protests pale in comparison.

Forbes



17 Comments on "US Might Have More Oil Resources Than Saudi Arabia, But…"

  1. BillT on Fri, 30th Mar 2012 4:19 am 

    Just as the ocean’s waters contain more gold than has ever been mined but cannot be claimed, so will the so called hard oil in the Midwest remain forever in place and never be claimed. Dream on deniers…

  2. SilentRunning on Fri, 30th Mar 2012 5:07 am 

    In the minds of the deniers, all hydrocarbons are equal. I suggest we give them a lump of asphalt, and tell them to put it in their gas tank and see how far they can drive on it.

  3. Rusty Baker on Fri, 30th Mar 2012 10:30 am 

    We need to develop good ole American energy resources and get off foreign oil now. But the brainless socialist left-wing and President Obummer keep blocking production and bowing down before the Saudi king. I’ll be darned if I have to keep paying $120 to fill up my Hemi-powered Dodge Ram.

    If all these damn hippies want to keep impeding the Keystone XL pipeline, Oil Sands, oil shale, ANWR and fracking, then I suggest they go out to the woods to live in huts while eating beetles and roots. Moreover, all that liberal crap about algae, solar panels and wind turbines replacing fossil fuels is a pipe dream. Those “alternative and clean” energy sources require oil and fossil fuel power to be manufactured-not to mention their low energy return on investment, but the misguided hippies think that we can run the American economy on idealism and sheer fantasy. Perhaps these communist hippies should stop puffing on their pipes and start working to build the Keystone XL Pipeline instead.

    Frankly, I’m gettin’ tired of all these smug, socialist, capitalist-hating greenies dictating energy policy in America. We can’t be worrying about a few trees, animals and water wells when the American economy is at risk. What we need to do is start producing that vast Oil Shale out in the West and keep fracking for oil, regardless of water use and carbon emissions. What’s more, global warming and environmental degradation are simply hoaxes invented by the elitist liberal media in order to swindle the American middle-class out of our hard-earned money.

  4. BillT on Fri, 30th Mar 2012 11:44 am 

    This is worth 23 minutes of your time…

    http://www.theoildrum.com/node/9045#more

    “From Qurayyah to Khurais: Turning Water Into Oil”

    This should be required watching all over the world. Consider what would happen to these installations if a Middle East war happened…

  5. armaggedon51 on Fri, 30th Mar 2012 12:43 pm 

    Wow Rusty that’s a lot of anger! I hope you don’t own too many guns. Well if you believe that the US has plenty of oil why don’t you start digging in your backyard and siphon the stuff to your gas tank ?

  6. george on Fri, 30th Mar 2012 1:39 pm 

    nice rant rusty .
    now go cry in the corner like a good little boy.
    don’t forget to gas up that there hemi.

  7. Newfie on Fri, 30th Mar 2012 1:48 pm 

    Rusty, sure, sure, the damn communists make you throw up all over your assault rifles, don’t they ?

  8. Beery on Fri, 30th Mar 2012 1:57 pm 

    Keep telling yourself that, Rusty, if it makes you feel better. Meanwhile, here in the real world, we’re preparing for a world in which oil supplies diminish, not due to any commie plot, but due to the fact that we’re using it way faster than we’re finding it.

  9. MrBill on Fri, 30th Mar 2012 2:00 pm 

    Rusty, seems to me oil was a lot hight under Bush and Dick Halliburton Cheney ($140). Also, I have recently read several articles indicating that Keystone XL may actually raise gasoline prices.

  10. Windmills on Fri, 30th Mar 2012 3:41 pm 

    Rusty’s writing is at too high a grade-level to be a right-wing fruit cake. I think he’s just trolling for self-amusement.

  11. SOS on Fri, 30th Mar 2012 4:28 pm 

    This author has ignored a lot of recoverable reserves. Utah has sued the federal government for control of huge areas they say have about 1 trillion recoverable reserves if you include colorado and wyoming as well.

    Under the Bakken is another huge reserve. It has more oil than the Bakken and has not been developed. It will when the infrastructure for the Bakken reserves is in place.

    North Dakota is partners in a new pipeline, announced yesterday, that will take the enormous quanties of the Bakken sweet crude east where there is a real need. The federal government cant stop it.

    There is enough oil on governement owned lands, oil they wont let us get, so we could pay off the national debt, completley fund social security and always have a balance budget without raising taxes. All from oil/gas revenues. That is what this government, that discourages developmenbt of the huge american reserves in favor of the most expensive energy on the planet, is costing each and everyone of you.

  12. SOS on Fri, 30th Mar 2012 4:42 pm 

    I hate to go on about the endless natural gas reserves too. You will be seeing more and more LNG stations for cars and trucks. CLNE (symbol) is the largest installer in the USA. They have the support of the auto companies as well. They are making LNG vehicles.

    The federal government takes in about 90 million/day now from federal oil reserves. This could easily be doubled if the government would promote orderly development of the known oil reserves on federal lands. Instead production and permits are down.

    There is an old belief among many that technology will provide for the human race. It always has. Now we are living in an age where undreamed of wealth can be created by the new drilling technologies.

    Just some years back claims of oil running out were real. Now with the new drilling technologies we are entering into an age of abundent, cheap energy. We have to make sure orderly development is promoted by the federal government to assure a prosperous future for us all.

    Things have changed, dont be a flat earther on oil/gas like our president.

  13. Grover Lembeck on Fri, 30th Mar 2012 5:46 pm 

    Trading groundwater for oil just to continue with the same stupid crap seems to me like a very poor bargain.

    Also, all that shale oil will be exported, because we won’t be able to afford to buy it. The drilling leases are owned by the oil companies, and they’ll do what they want with the oil- it has as much to do with American gas prices as it does to do with Chinese gas prices.

  14. SOS on Fri, 30th Mar 2012 10:30 pm 

    You are not trading ground water. Nothing happens to the ground water except it gets reinjected into the ground. The ratio of water used per barrel of oil produced is very, very low.

    Leases promise royalties to the lessor. The lease controls what happens. Leases can force production. When the oil is produced the government gets the money. We all benefit.

    Oil and its price has far more to do with the US government an d their policy of discouraging and preventing oil/gas production than it does with Chinas gas prices.

    New drilling technologies are changing the world forever. Suddenly there are more available reserves then ever dreamed of. Dont be ignorant of this fact. The president is a flat earther about this and still wants to promote the most expensive transportation in the world: electric cars.

    Dont be a flat earther, support orderly and sustained development of the US reserves. It will pay the debt, balance the budget and fund social secruity.

  15. SOS on Fri, 30th Mar 2012 10:33 pm 

    The best fracking sand comes for Minnesota. It has spherical grains. It is causing a mini boom for them. Discussions are underway for a slurry pipeline to carry the sands to the Bakken in North Dakota and vast reserves that lie beneath it.

  16. Gleb on Sat, 31st Mar 2012 12:09 am 

    I say as gas gets to $10 gal and keeps rising, most of those hemi trucks will sit on some used car lot languishing away. I also noitice its the big 4×4 and such vehicles that have the worst driving style for economy. Really forget the vehicle aspect for a moment and remember that all food grown needs oil to be produced, the green revolution is all oil based and now about 4 globalist corporations control all food production. Ouch for poor third worlders.

  17. pete on Sat, 31st Mar 2012 3:24 am 

    sos will then tell us how this big turn around will come about, I am amused. But if I hear wind of frac the crap out of everything, open the last few unspoiled areas in north america or be dam with regulation for offshore wells and more tax breaks for the .01%. Then I might be inclined to shout OIL LOBBYIST!.