It’s no surprise that a new National Petroleum Council report says North America’s natural gas potential is huge.
It’s become a common refrain in recent years as hydraulic fracturing has unlocked vast formations previously deemed uneconomic to tap.
But the report’s finding that oil is also more abundant than previously thought was less predictable.
The same technology that opened up shale gas — combined with success in the deep-water Gulf of Mexico and even surges in conventional oil onshore — are improving the nation’s potential to be more self-reliant for oil, according to the report released today.
By 2035, oil from shale formations — also referred to as “tight oil” – could produce 2 million to 3 million barrels of oil per day. Under the most optimistic assumptions the U.S. and Canada combined could produce up to 22.5 million barrels per day, the study concludes.
But that isn’t likely to wean the U.S. off oil imports from overseas the report warns, as current oil demand is about 22.5 million barrels per day.
Here’s a link to a slide show summarizing the report.
The NPC, a collection of industry, academic, government and other officials, convenes several times per year to gather information, give advice and issue reports on topics for the Secretary of Energy. The most recent report was a 2007 study on the global energy supply and demand situation.
A presentation from a Sept. 2011 National Petroleum Council report says North American oil production could boom given the right circumstances. (Image: NPC)
In 2009 Energy Secretary Steven Chu asked the group to look at U.S. natural gas and oil resources based on four concepts: economic prosperity, environmental sustainability, energy security and prudent development.
The study group was led by Anadarko Petroleum CEO Jim Hackett and included other luminaries of the energy world, among them Marvin Odum, CEO of Shell’s North American business, Chesapeake Energy CEO Aubrey McClendon and Pulitzer Prize-winning author and IHS-CERA Chairman Dan Yergin.
Much of the study stresses the size of the U.S.’s natural gas and oil resources and how developing them fully could be huge for the U.S. economy. In particular the study refers to the job potential created by expanded natural gas and drilling exploration and production.
The abundance of natural gas is also driving a rebound in the U.S. chemical industry as natural gas is an important feedstock for many products, including plastics, the study notes
But further development of oil and gas must be done in an environmentally responsible manner, the NPC study reports. A growing backlash against natural gas development in particular is threatening the success of the exploration and production, so industry needs to do more to drill safely and show the public that it’s doing so.
The report argues that while the industry can and should do more to improve the safety and reduce the environmental impact of natural gas drilling and production, the industry has already made great strides in those areas.
Some other recommendations from the NPC study:
- The creation of industry-led, regional “councils of excellence” to make sure the best practices for safe natural gas development are being shared among all companies.
The councils would include regulators, non-governmental organizations and the public, the NPC report says, avoid being overly bureaucratic and draw on existing organizations and structures. (this recommendation is interesting given the disagreement over it we wrote about previously)
- Introduction of a carbon price or a clean energy standard, where power producers were required to use a certain percentage of clean sources over time.
That oil companies would sign off on a report that calls for a carbon tax shouldn’t come as a complete surprise. A number of firms, including BP and Shell, have signed on to coalitions that were working on carbon trading schemes for the U.S.
And in the past executives with Exxon Mobil Corp. and other firms have said they support the notion of a carbon tax because it is simpler than a trading system and more likely to be applied fairly across companies.
- Classifying natural gas as a “clean fuel” for purposes of clean energy standards.
- Development of environmental footprints and full fuel cycle impacts in comparing different energy sources and technologies. This means assessing items like land and water use for extracting energy sources and looking at how those resources affect the environment.
“In theory, an environmental footprint analysis is an objective, science-based assessment of the potential positive and negative impact of each energy source. In practice, however, environmental footprint analyses are in early stages of development, with analyses exhibiting different techniques for measuring impacts and widely varying assumptions that often end up producing apples-to-oranges comparison across fuels and energy resources.”
- Development of government regulations that balance prescriptive and performance-based regulations
- Adequate funding for regulators, perhaps through industry fees.
- More basic energy research funded by the government, since some areas simply aren’t seen as cost effective areas of research for private companies and are thus avoided.
- Allowing longer lease times for “frontier” areas, such as the ultra-deep water and Arctic where planning and operations are significantly more challenging.
- Maintaining tailored royalty relief programs that encourage early development and production.
Good post Tom.
So the only thing holding us back is the Left and the Obama Regime.
Problem is though is that the fool in the White House and the LSMedia who both hate big oil and want to see us not use our own resources do not like that we have all of this oil and gas…. Our goofy president wants to tax the energy industry out of existence in this country…. I for one will be shocked if they are allowed to drill for this energy and it would put a huge dent in the un-employment rolls if the fools in Washington would actually allow them to drill….
I for one am actually surprised that the Chronicle even reported this….
Peak Oil, Peak Oil,Peak Oil,Peak Oil,
It’s always been there except every time companies have tried to access it OPEC turns on the spigots we gave them , and puts our guys out of business, buys up the assets then raises prices again. Don’t even talk about the speculators that are run by OPEC also.
Plenty of oil? Sure … but y’all just stay bent-over at the gas pump. Obama and his lefty-wackos don’t want you using it.
I am equally surprised this article was published. Between the vast shale formations and abundant oil in places such as Alaska in this great country, it is still clear Obama would rather be in bed with the foreign powers that be. As a recent college graduate, you have to respect the oil industry, because they take the time to train their people properly, pay them extremely well(they are one of the few industries left that provides benefits and GOOD health insurance), and run relaxed, but profitable business .Why the administration has declared war on the industry I do not know, but I’d guess profit sharing, and equally so, a dislike of one group having success is too hard on them.
Will Perry or Romney open up fracking and drilling? Because I think the answer for us is going to be a surprising NO.
Ron Paul 2012
So let me get this straight pfh42, you hate socialism and government handouts, but you want them to continue for oil and gas companies? Seems hypocritical.
pdh42
If you’re surprised then I suspect you don’t really read our content very often or very closely, particularly on FuelFix.com.
PDH42,
Did you read the article fully? We ARE already drilling for for this oil and gas…Its a surprise that so much oil has been found in tight oil formations. As far as Taxes…Did you read how the Big Oil companies are OK with Carbon taxes? if not here is the portion:
That oil companies would sign off on a report that calls for a carbon tax shouldn’t come as a complete surprise. A number of firms, including BP and Shell, have signed on to coalitions that were working on carbon trading schemes for the U.S.
And in the past executives with Exxon Mobil Corp. and other firms have said they support the notion of a carbon tax because it is simpler than a trading system and more likely to be applied fairly across companies.
This report is from Industry people and it’s no surprise that Big oil is leading the way for Renewables.. Exxon – Wind Energy, BP- Solar, Chevron – Gethermal….Unlike what you would hear everywhere else.
Please read the article fully before posting…if you don’t it makes look like one of these Fox News educated, overly aggressive, tea party, right wing Nut.
Looks like a couple folks didn’t actually read the report. Some fun facts for you:
* US production has increased in 2009 and 2010.
* US is the 3rd largest producer of oil in the world.
* No matter what we do, we will still be dependent on foreign oil.
* You’ll also notice they say North America, which basically means Canada. This administration has no control over those socialists north of the border.
That’s okay folks. Those of us in the oil and gas business are in it for the profit, NOT as a public service. When we get to the point that we we can’t make many exploiting oil and gas resources any more, we’ll lay everyone off and close the doors. Then John Q Public can figure out how to provide his own energy all by himself!
U.S. has “surprisingly” large amount of oil huh ?
hummmmm…..
look into my eye and see if i care…
i dont need their oil .
there are other ways around oil….
shuuuuuuuuuu….
dont tell..
They can already get to quite a bit of this stuff; they just want the federal govt. to override the preferences of the states. They also already get huge profits, enough to justify exploration etc. and the research they claim they can’t afford to do, but they know that they have the US in an extractive position so they are just trying to have it even easier than they already do.
Some of you need to turn the TV off for a day or two and soak your heads in a dose of reality and get away from the fanatic hyperbole.
Oil production is rising in the US today! Our current administration is not trying to limit this growth! Our current administration is trying to prod companies who have leases on federal lands to actually go and explore instead of wasting the leases!
“Under the most optimistic assumptions the U.S. and Canada combined could produce up to 22.5 million barrels per day, the study concludes.”
Did anyone’s “most optimistic assumptions” ever turn out to be true? I assume this is someone’s “P10″ case: there is only a 10% chance of this happening, and a 90% probability it won’t happen. After fifty years in this business I’ve never seen anyone’s P10 case happen in a single project. This projection assumes everyone’s P10 case will come to pass.
pdh42, nice theory, but I’m not aware of any places in the U.S. where a company from an OPEC country operates any upstream facilities, and certainly not on any large scale.
Please enlighten us all.
luckyone: what a well educated, insigtful comment!
Oh, wait, I’m wrong.
Never mind.
Unfortunately, fracking requires huge amounts of water. What happens when water becomes scarce? We’ll be using up one precious commodity to get at another precious commodity. It’s ultimately an unsustainable production model. At least the industry is actively looking at more environmentally responsible and sustainable ways to extract oil and gas. It’s also good to hear that they’re promoting a carbon tax.
@AvidReader: right ON!
Tom,
I usually look at the EIA data for total oil useage. The article says that currently we are using 22.5 Millon bbls Oil/Day, (the article is probably just quoting the study) but I don’t think thats true anymore like it was in 2006-07. On average in the summer time (peak oil usage) we are now under 20 Million bbls Oil/Day.
The other side of that, is that we are already exporting 2.45 Million bbls oil/day of refined oil products.
All that to say, I think this would be a way to get US/Canada totally off of middle east and venesula oil.
Thanks,
Jared:
I believe the 22.5 mbbls number was US and Canada in the report.
road chick – The only reason the production model is unsustainable is because OIL is a finite resource. It has nothing to do with the scarcity of water however. Take the Middle East for example. In an area where water is scarce, industry has created their own supply by constructing large water desalination facilities to use seawater for oil production.
s3 – I really hope your comment was sarcasm or something; otherwise it could be the most ridiculously misinformed comment ever. Why would industry want to be regulated federally instead of at a state level? With oil friendly states (TX, WY, ND, LA, PA, etc) why would industry want to jeopardize their working interest by placing their regulations into the dynamic dishwasher that is the fed govt and its spider web of agencies within the DOI? They wouldn’t. And yes, the profit does justify exploration. Congratulations, you just cracked the riddle of a business model – risk generates reward. However in case you haven’t noticed, with US domestic production rising, that rise can be directly attributed to research you claim “they say they can’t afford to do.” Twenty years ago the idea of shale gas and liquids was far off; however through R&D industry has made those ideas feasible and US production is at an all time high because of it.
Lets get real – in what ways is government prodding companies to go and explore? By repealing oil tax credits (which in reality shouldn’t even be called credits) and repealing and withholding leases permitted under the Bush administration as Sec. Salazar did in Utah? If that’s prodding, I would hate to see what restrictive acts look like.
Now, if we could just turn oil into water, we’d really have something.
“pacificoil” please, please read the article before commenting. Until you do that, nobody will take you seriously. It specifically said that these guys want the government to subsidize basic energy research that they apparently can’t manage to do themselves with record profits.
You’re obviously a troll (or your cognitive dissonance has overwhelmed you) but I’ll bite — you claim the oil companies don’t want the feds involved — guess who’s going to be implementing a carbon tax? The states?
It’s just amazing how the hate pd42 and luckyone (chronic sufferers from the President Obama Induced Mental Derangement Syndrome) harbor against the president of the United States, no matter if positive FACTS are presented to them, as in this article, of the US/Canada increased oil and gas production, and soon to improve substantialy.
Stop importing Middle East Oil? What insanity. Every dollar we pay for Middle East oil, we get back + more in the form of sales of weapons, materials, etc. They park.their money on our banks and certain countries sell it to us as a discount. So let’s continue supporting Israel and get nothing or risk losing our jobs when the Arabs tire of our being. hypocrites