As fascinating as the subject is, I'm not going to bury you in a technical discussion about how petroleum generates, accumulates, and is extracted. (But I could if you really wanted it...) My purpose here is to share some facts with all of you by addressing a few questions:
It is a bit too simplistic to multiply those numbers by 12 to get annual totals since consumption in particular can vary widely month to month. However, if we did this bit of math, we would project annual production in 2011 to be 10.3 billion barrels of fossil fuels and annual consumption in 2011 to be 16.3 billion barrels of fossil fuels. These numbers are consistent with the latest annual totals available for 2010: 10 billion barrels produced, 14 billion barrels consumed.
Many of you read about America's "dependence on foreign oil." Twenty-seven percent of those imports came from Canada. Saudi Arabia supplied fourteen percent, and the rest of the world's exporters (Mexico, Nigeria, Venezuela, Angola, Iraq...) supplied the rest (Source: EIA). While we'd all agree that Canada is indeed a foreign country, it hardly poses a political or cultural threat to the US.
In 2009, about 8% of US energy consumption was in the form of alternative (renewable) energy sources (Source: EIA). By the year 2035, an estimated 17% of our consumption could be covered by alternative sources--but this projection assumes that growth of the alternative energy industry will be supported by substantial tax credits and subsidies. Given the current political climate, it is very likely that the predicted 17% is overly optimistic.
But for the sake of argument, let's say that renewables are able to cover 17% of total consumption in 2035. A gap between energy production and consumption would still remain, a gap that would probably be covered by imported fossil fuels.
If we want to substantially reduce our "reliance on foreign oil" we either need to reduce consumption (a topic for another day) or find more domestic energy sources. Renewables will only take us so far. Do we have additional petroleum resources that we are not utilizing?
Undiscovered mean volumes are estimated volumes of accumulations of oil and gas that geological studies suggest might be present in the subsurface. They are not proven using standard technologies (drilling a well, for example). Because there isn't hard data to support the estimates, the volumes are generally considered an overestimate--not all of the petroleum suspected to be there can be extracted using known technologies.
Undiscovered technically recoverable volumes are estimated volumes of accumulations of oil and gas determined as above, but that are thought to be extractable using known technologies. They are also an overestimate.
Proven reserves are volumes of accumulations proven by known technologies (drilling a well) that are extractable with known technologies and that have a greater than 90% probability of being present in those stated volumes (also called P90 reserves).
Inferred reserves are estimates of increases in reserve volumes that are made during development of a field. It is indeed possible for reserves to increase in this manner, such as when P50 and P30 reserves are confirmed and brought into the P90 category, but it is also possible for reserves estimates to decrease during development. These estimates are a bit sketchy.
Finally, there is something called recovery factor. This interesting variable represents the percentage of petroleum that is actually extracted from an accumulation. In their shareholder propaganda, er, literature, some companies will say they plan for a 60% recovery factor. In reality, 30% is a more typical global value. This means that for any given accumulation, we are likely to only be able to extract 30% of it. There are physical reasons why we can't extract 100% of the fluids from a given reservoir but that isn't important here.
Recovery factor can be increased by injecting fluids into a reservoir to keep up the pressure and to flood (push) more oil towards producing wells. It can be increased by adding surfactants, solvents, and other chemicals to a reservoir. It can be increased by cleaning up the insides of producing wells (acid jobs, refracturing, reperforating, etc.). It can be increased by better field development design (where do you place your injection and production wells; what is their geometry, etc.). But any one of these things may only increase recovery by a percent or two.
For 2007 (the year of the most recent reliable annual reserve totals), the total technically recoverable reserves within by the US, which include proven P90 + inferred + undiscovered technically producible reserves, are 198 billion barrels of oil and 2119 trillion cubic feet of dry natural gas (Source: EIA). We need to convert the gas to barrels so we can compare to our monthly and annual consumption numbers. The natural gas converts to 365 billion barrels of oil equivalent, for a total of 563 billion barrels oil equivalent. Oil and gas are of course consumed by very different sectors of the US economy and aren't really "equal" but I'm going to combine them for ease of comparison.
Now here's the catch. We have to apply the recovery factor. In an optimistic scenario using current technology, we may have about 169 billion barrels oil equivalent in recoverable reserves in the US. Assuming that all of these reserves can actually be extracted, that there are no barriers to leasing, drilling, pipelines, and refineries, and that consumption remains at 2009 levels, these recoverable reserves represent about 33 years of imports, or 12.5 years of total consumption. Do you think my assumptions are good ones? I don't.
It's a hard fact but we are not ever going to replace imports with domestically produced fossil fuels. The only way to replace imports is to remove our need for them entirely.
Appendix: Where are Domestic Reserves Located?
I've selected just two highlights here but you can get more information from the USGS.
National Petroleum Reserve of Alaska: The undiscovered mean volume of the NPRA is estimated by the USGS to be 896 million barrels oil and 53 TCF natural gas. After conversion and application of the recovery factors, we get a grand total of 3 billion barrels oil equivalent. Using petroleum from this source, we could replace two-thirds of a year's imports (all assumptions as stated above) or about two months of total annual consumption. Is it worth exploiting this fragile landscape for that?
Gulf of Mexico: Here, I'm combining undiscovered mean volumes for shallow-water Tertiary plays and deep onshore Jurassic and Cretaceous plays. The estimated mean volumes are 261.4 TCF natural gas, 3.09 billion barrels of oil, and 6.6 billion barrels of natural gas liquids (which are rather valuable). After conversion and application of the recovery factor, this comes out to a combined total of 2.9 billion barrels oil equivalent. Like the NPRA example above, we could replace about two-thirds of a year's imports (all assumptions as stated above) or less than two months of total annual consumption. Is it worth all of the political hand wringing that would be required to drill more wells in this area?
So the next time a friend or co-worker begins to grump about "foreign oil", tell them about Canada. The next time a neighbor or somebody you meet at a party begins to rant about how drilling more US wells will solve all of our problems, tell them how our optimistically estimated reserves can only account for 12.5 years of total annual production (assumptions as above). Share the website links I've put in this blog. Go and read the reports for yourself, no reason to take my word for it. Think about choices and changes you can make regarding your own energy use. That electric car gets power from somewhere--very likely a coal-burning electricity plant. Not all choices are obvious or simple. But the more facts you start with, the better choices you will end up making.
- How much petroleum does the US produce?
- How much petroleum does the US consume?
- The US imports petroleum. Where does it come from?
- Can the US replace imports with domestic sources?
The Production and Consumption Landscape
In January, 2011, the United States, across all sectors, produced 860 million barrels of fossil fuels. In January 2011, the United States, across all sectors, consumed 1,358 million barrels of fossil fuels (Source: EIA; I converted Btus to barrels for you). The problem is fairly clear: we consume more fossil fuels than we produce.It is a bit too simplistic to multiply those numbers by 12 to get annual totals since consumption in particular can vary widely month to month. However, if we did this bit of math, we would project annual production in 2011 to be 10.3 billion barrels of fossil fuels and annual consumption in 2011 to be 16.3 billion barrels of fossil fuels. These numbers are consistent with the latest annual totals available for 2010: 10 billion barrels produced, 14 billion barrels consumed.
Imports
The United States is a net importer of fossil fuels and has been thus since at least 1949. We have been importing more than 20% of our total consumed fossils fuels since 1987, more than 30% since 2001. We imported 5.1 billion barrels of fossil fuels in 2010 (source: EIA), 36% of our total consumption. We imported more than eight million barrels of petroleum per day in February, 2011 (Source: EIA). Where does all of that petroleum come from?Many of you read about America's "dependence on foreign oil." Twenty-seven percent of those imports came from Canada. Saudi Arabia supplied fourteen percent, and the rest of the world's exporters (Mexico, Nigeria, Venezuela, Angola, Iraq...) supplied the rest (Source: EIA). While we'd all agree that Canada is indeed a foreign country, it hardly poses a political or cultural threat to the US.
In 2009, about 8% of US energy consumption was in the form of alternative (renewable) energy sources (Source: EIA). By the year 2035, an estimated 17% of our consumption could be covered by alternative sources--but this projection assumes that growth of the alternative energy industry will be supported by substantial tax credits and subsidies. Given the current political climate, it is very likely that the predicted 17% is overly optimistic.
But for the sake of argument, let's say that renewables are able to cover 17% of total consumption in 2035. A gap between energy production and consumption would still remain, a gap that would probably be covered by imported fossil fuels.
If we want to substantially reduce our "reliance on foreign oil" we either need to reduce consumption (a topic for another day) or find more domestic energy sources. Renewables will only take us so far. Do we have additional petroleum resources that we are not utilizing?
Can the US Produce More Oil?
Let's take a look at the overall picture of domestic reserves. The situation gets a bit murky with jargon so I'll need to define some terms first. It gets a bit dense here but push through it and keep reading.Undiscovered mean volumes are estimated volumes of accumulations of oil and gas that geological studies suggest might be present in the subsurface. They are not proven using standard technologies (drilling a well, for example). Because there isn't hard data to support the estimates, the volumes are generally considered an overestimate--not all of the petroleum suspected to be there can be extracted using known technologies.
Undiscovered technically recoverable volumes are estimated volumes of accumulations of oil and gas determined as above, but that are thought to be extractable using known technologies. They are also an overestimate.
Proven reserves are volumes of accumulations proven by known technologies (drilling a well) that are extractable with known technologies and that have a greater than 90% probability of being present in those stated volumes (also called P90 reserves).
Inferred reserves are estimates of increases in reserve volumes that are made during development of a field. It is indeed possible for reserves to increase in this manner, such as when P50 and P30 reserves are confirmed and brought into the P90 category, but it is also possible for reserves estimates to decrease during development. These estimates are a bit sketchy.
Finally, there is something called recovery factor. This interesting variable represents the percentage of petroleum that is actually extracted from an accumulation. In their shareholder propaganda, er, literature, some companies will say they plan for a 60% recovery factor. In reality, 30% is a more typical global value. This means that for any given accumulation, we are likely to only be able to extract 30% of it. There are physical reasons why we can't extract 100% of the fluids from a given reservoir but that isn't important here.
Recovery factor can be increased by injecting fluids into a reservoir to keep up the pressure and to flood (push) more oil towards producing wells. It can be increased by adding surfactants, solvents, and other chemicals to a reservoir. It can be increased by cleaning up the insides of producing wells (acid jobs, refracturing, reperforating, etc.). It can be increased by better field development design (where do you place your injection and production wells; what is their geometry, etc.). But any one of these things may only increase recovery by a percent or two.
For 2007 (the year of the most recent reliable annual reserve totals), the total technically recoverable reserves within by the US, which include proven P90 + inferred + undiscovered technically producible reserves, are 198 billion barrels of oil and 2119 trillion cubic feet of dry natural gas (Source: EIA). We need to convert the gas to barrels so we can compare to our monthly and annual consumption numbers. The natural gas converts to 365 billion barrels of oil equivalent, for a total of 563 billion barrels oil equivalent. Oil and gas are of course consumed by very different sectors of the US economy and aren't really "equal" but I'm going to combine them for ease of comparison.
Now here's the catch. We have to apply the recovery factor. In an optimistic scenario using current technology, we may have about 169 billion barrels oil equivalent in recoverable reserves in the US. Assuming that all of these reserves can actually be extracted, that there are no barriers to leasing, drilling, pipelines, and refineries, and that consumption remains at 2009 levels, these recoverable reserves represent about 33 years of imports, or 12.5 years of total consumption. Do you think my assumptions are good ones? I don't.
It's a hard fact but we are not ever going to replace imports with domestically produced fossil fuels. The only way to replace imports is to remove our need for them entirely.
Appendix: Where are Domestic Reserves Located?
I've selected just two highlights here but you can get more information from the USGS.
National Petroleum Reserve of Alaska: The undiscovered mean volume of the NPRA is estimated by the USGS to be 896 million barrels oil and 53 TCF natural gas. After conversion and application of the recovery factors, we get a grand total of 3 billion barrels oil equivalent. Using petroleum from this source, we could replace two-thirds of a year's imports (all assumptions as stated above) or about two months of total annual consumption. Is it worth exploiting this fragile landscape for that?
Gulf of Mexico: Here, I'm combining undiscovered mean volumes for shallow-water Tertiary plays and deep onshore Jurassic and Cretaceous plays. The estimated mean volumes are 261.4 TCF natural gas, 3.09 billion barrels of oil, and 6.6 billion barrels of natural gas liquids (which are rather valuable). After conversion and application of the recovery factor, this comes out to a combined total of 2.9 billion barrels oil equivalent. Like the NPRA example above, we could replace about two-thirds of a year's imports (all assumptions as stated above) or less than two months of total annual consumption. Is it worth all of the political hand wringing that would be required to drill more wells in this area?
So the next time a friend or co-worker begins to grump about "foreign oil", tell them about Canada. The next time a neighbor or somebody you meet at a party begins to rant about how drilling more US wells will solve all of our problems, tell them how our optimistically estimated reserves can only account for 12.5 years of total annual production (assumptions as above). Share the website links I've put in this blog. Go and read the reports for yourself, no reason to take my word for it. Think about choices and changes you can make regarding your own energy use. That electric car gets power from somewhere--very likely a coal-burning electricity plant. Not all choices are obvious or simple. But the more facts you start with, the better choices you will end up making.
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