Email of the day (2)
"You may be interested to read a less enthusiastic take on the prospects for US energy independence:"
David Fuller's view Yes, and thanks for the article because
there are few subjects more important for economic growth than the availability
of affordable energy supplies.
Gregor Macdonald is correct in pointing out a significant production error in The Telegraph's article quoted immediately below, but what about his own views? Here is a section:
The US is currently enjoying its second stabilization phase since the peak in 1970. (Daily oil production has rebounded from a deep hole in 2008, from below 5 mbpd to above 5.5 mbpd). The first stabilization period lasted for more than 7 years, from 1977 to 1985. While it did not reverse the overall decline trend, which had resumed by 1990, this was certainly good news, just as our current production increases are good news. But the production history laid out graphically here is instructive and gives a clear warning: It would be unwise to herald the recent uptick in domestic production with a "new era" headline. Deepwater drilling, Gulf of Mexico, and Alaska were all "new era" events in their day as well. Or so they seemed.
Now, three respectable publications have recently cast the advent of new oil extraction in America as a kind of miracle. And indeed, technologically, the refinement of hydraulic fracturing techniques - first used to extract natural gas, and now used to extract oil - is miraculous. But a technique such as this, although replicable and repeatable, will not change the fact that newer, unconventional resources are developed and produce oil at a much slower rate. One year after the Black Giant of East Texas was discovered in the early 1930s, it was producing just 1 mbpd. The US no longer has resources such as this to exploit. The history of US oil production over the past 40 years should make this clear.
Yes, unconventional oil production is considerably slower than drilling a hole in the sand and having crude gush out. However supply is the much more important variable and he has not mentioned USA's reserves of shale oil.
This 2004 report from the Office of Navel Petroleum and Oil Shale Reserves estimates US shale oil reserves at 2 trillion barrels. This should make these reserves larger than those of Alaska and the Gulf of Mexico, although those regions have yet to be fully developed. Another report mentions that the Bakken shale oil field alone could hold over 4 billion barrels of oil. You will find plenty more information by Googling.
I have previously posted graphics - from the Energy Information Administration in Washington, I believe - stating that the USA has the world's largest known reserves of shale oil. Therefore, supply is not the problem but the politics of energy extraction may be.
Nevertheless, this article from the Financial Times: "Oil shale boom boosts US jobs market" (may require subscription registration, PDF also provided) offers a crucial insight as to why the Obama administration has not discouraged the development of these strategic reserves - US jobs.