Not Too Good To Be True

Some of the latest research on U.S. petroleum reserves paints a refreshingly optimistic picture of our future capacity – not just in shale gas which is often touted as the fuel of the future, but for oil as well.

One study from the National Petroleum Council found that the United States and Canada, combined, could be producing 22.5 million barrels per day by the year 2035, an amount about equal to current domestic demand today. The report finds that the same technologies — such as hydraulic fracturing and horizontal drilling — that have helped producers access more shale gas, could also unlock large volumes of so-called tight oil which has long been considered inaccessible. This trend of increased production, the report finds, would lead to job creation not just in the oil and gas industry, but also in the petrochemicals sector, which relies on oil and gas as key feedstocks.

The National Petroleum Council’s report follows another recent study from Goldman Sachs finding that the U.S. – currently the world’s third largest oil producer behind Saudi Arabia and Russia – could become the largest later this decade.

Such numbers are good, but definitely not too good to be true. In a recent Wall Street Journal piece, Daniel Yergin takes an in-depth look at the history of the peak oil discussion and explains why the doomsayers have repeatedly underestimated the United States’ oil-producing potential. Take as just one example, the Bakken formation in North Dakota. Just eight years ago, it was producing about 10,000 barrels per day, but today that has risen to more than 400,000 bpd, and North Dakota is the fourth largest oil-producing state in the country, thanks largely to that “tight oil” that the National Petroleum Council references in its report.

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About The Author

David Holt is President of Consumer Energy Alliance, serving in this position since January 2006. As the voice of the energy consumer, Consumer Energy Alliance works to increase domestic energy production and reduce consumer energy prices. CEA seeks to motivate and provide a voice for consumers interested in vital public issues, such as responsible access to available natural resources; power generation; impact of energy prices on business, agriculture and consumers; development of a robust, domestic renewable energy industry; and utilization of new technologies that allow for higher levels of energy efficiency and conservation. With more than 220 consumer and energy affiliate organizations representing every sector of the American economy, and 300,000-plus consumer advocates, Consumer Energy Alliance continues to expand dialogue and develop joint messaging among the energy and consuming sectors through its various activities. David is a Professor with Norway’s Nordland University Graduate School of Business, Master of Science in Energy Management Program, in cooperation with the International Institute of Energy Policy & Diplomacy at the MGIMO University in Moscow, Russia. He serves on the board of Consumer Energy Education Foundation and the St Anne Foundation. David is also a member of the Texas Bar Association and the Houston Bar Association.