Oil May Be Finite, But U.S. Production Is Ramping Up 745
Hugh Pickens writes "The WSJ reports that the discovery of the gigantic and prolific Bakken oil fields of Montana and North Dakota have already helped move the U.S. into third place among world oil producers, and according to Harold Hamm, CEO of Continental Resources, the 14th-largest oil company in America, if fully developed the field in Bakken contains 24 billion barrels, doubling America's proven oil reserves. One reason for America's abundant supply of oil and natural gas has been the development of new drilling techniques, including 'horizontal drilling,' which allows rigs to reach two miles into the ground and then spread horizontally by thousands of feet." Not surprisingly, Hamm considers some of the current administration's loans and subsidies for alternative energy ventures to be misplaced.
Re:Reserves isn't the only reason... (Score:1, Interesting)
Gas prices have doubled. It's killing our economy. We really don't have the luxury of entertaining your zealotry at the moment.
Someone environmentalists need to grasp is that environmentalism is itself a luxury. In poor countries they don't worry about it because they have bigger problems like how they're going to eat tonight.
By assaulting the US economy, environmentalists in the US have forced a realignment of resources AWAY from all unnessary spending. That includes nearly everything they care about. Obviously environmentalists will argue that their issues are just as or even more important. But they don't control the money and what they think at that point doesn't matter.
If the environmental movement is to save itself it had been find a way to do its work without trashing the economy. Because on top of everything else if people come to associate environmental policy with a bad economy then that alone could kill the movement.
This is survival time here guys. Time to adapt.
Destroying peoples life (Score:2, Interesting)
Horizontal drilling or so called fracking poisons the ground water thus making it undrinkable. It should never be allowed!
http://www.youtube.com/watch?v=dEB_Wwe-uBM&feature=related
http://www.youtube.com/watch?v=U01EK76Sy4A&feature=related
It is disaster and big companies shoudn't get away with this but apparently they do.
Oil "may be" finite (Score:5, Interesting)
Economically, petroleum is even more of a finite resource. Currently Saudi and other middle eastern oil keep prices down. Estimates say it costs about $2 a barrel to extract oil in Saudi Arabia. Venezuela oil might costs three times that much to extract. US oil might be as much as $20 a barrel. At these extraction costs a barrel of oil is $80, and it costs over three dollars at the pump in the US. Now, one can blame the greed of the oil companies, but that is not going to change. Explorations costs are not going to decrease either.
OTOH, conservative extraction costs for so-called shale oil, the better name is tar pits, is $75 dollars a barrel. If the oil companies sell at a comparative markup, this means that the selling price would be $300 a barrel. If we just add $60 profit, that would still be $135 a barrel. This puts gas firmly in the $5 a gallon range.
Recall that the oil companies were going bust when oil was below $50 a barrel. This was still a large markup over extraction costs, but oil companies appear to be extraordinarily inefficient and require a large markup. It would be fantasy that the oil companies are going to give away the product. If shale oil forms a large percentage of the petroleum mix prices will go up, consumption will eventually go down as it did a few years ago. Oil companies will either have a choice of selling at higher prices for lower volumes, or find another product.
Therefore shale oil is not an indication of a long term prosperous oil economy, but a clear signal that oil is becoming too costly to base an economy on.
Re:Don't they get it (Score:1, Interesting)
The oil is going to get burned one way or another.
Resign yourself to that.
Consider some of the Geo-engineering options. Short of that you might as well play a fiddle because this is going to happen.
Molleindustria (Score:4, Interesting)
Funny how a game can emulate reality, and then reality can re-emulate the game: http://www.molleindustria.org/en/oiligarchy
Re:Idiot (Score:1, Interesting)
People have been saying that since 1920... well... they said it would run out in 1920... and then they said it would run out in 1950... and then they said it would run out in 1980... and then they said it would run out in 2000...
It's 2011... We're still here and oil is still WAAAAY cheaper then any solar option.
Here's a little eye opener for you. How many solar power factories produce their own power with solar power?
Try just about none of them. If you don't think about that then you won't break through the cognitive dissonance.
It isn't ready yet.
Re:Idiot (Score:5, Interesting)
For anyone who hasn't seen it, check out this old mathematician (Albert Bartlett) talking about energy and exponential growth. He makes it so obviously clear why we'll be running out of oil shortly even given the most optimistic projections of future growth. It's clear enough for Joe Sixpack to understand - as Einstein would say "as simple as possible, but no simpler".
http://www.youtube.com/watch?v=F-QA2rkpBSY
Re:Reserves isn't the only reason... (Score:4, Interesting)
meh (Score:4, Interesting)
Unless there is a quantum leap in the efficiency with which electricity can be produced from non-fossil sources, we are eventually going to exhaust all the retrievable coal, oil and gas in the earth's crust. What is considered "retrievable" is a moving target determined by current extraction technology. Even if the U.S. were to institute subsidies that evened the playing field between fossil sources and green sources in the U.S., it is unlikely those subsidies would be duplicated across the entire globe. Ergo it would remain profitable to extract U.S. oil. It seems unlikely there will ever be the political will to forbid oil exploration and extraction altogether in the United States.
It's also worth noting that extracting and refining this particular cache of oil does not significantly alter the global price, and therefore does not significantly alter global consumption. It is not the case that more oil will be used because this particular batch was extracted. More U.S. oil will be used, on the other hand, which means more jobs, etc. for U.S. citizens.
Given the economy is in the dumps, the only reasons I can see not to extract it are:
* Strategic. When oil becomes scarce (and thereby prohibitively expensive) we want to have national reserves on tap for military consumption.
* Environmental, but in a local sense. You could argue that the environmental costs at the point of extraction are just too high.
"Global warming" doesn't seem like a compelling reason at the moment given the small percentage of global production these new fields represent. "Drill here, drill now, pay less" is a ginormous fallacy. To the extent "pay less" is fallacious, though, so is the notion that domestic drilling will lead to more consumption and consequently more atmospheric CO2.
Re:Destroying peoples life (Score:4, Interesting)
What concerns me is that I live in a state that's right on the ocean, so, all that crap water coming from red states up river from me has the chance to screw up our crops and our drinking water. Fortunately, the city owns the entire water shed so those chemicals shouldn't be getting into our water, but there's a good chance that they'll end up polluting the fisheries in other states.
Re:Wow (Score:4, Interesting)
Last major oil discovery, truely major, is in fact back in 1950 with the Arabic peninsula reserves. Since that time, nothing really significant was discovered. Since today, the Saudia Arabia was able to match the demand with the production. It is now over, they can no longer boost the production to match the demand and this is the indication their reserves are on the down side of the peak. The 1970 crisis is due to the US oil reserves reaching themselves the highest production peak, what is just happening today with Saudia Arabia reserves. Then, back in 1970, the Arabic countries decided to no longer sell their oil for cheap and they united into what is then known as OPEC. That triggered the 1970 crisis because USA was now dependant on oil from other countries since its own reserves were depleting.
Also, don't mix things, plastic and fuel are made from different components of the oil. It's not because you have plenty of tar you are necessarily don't have a fuel shortage problem with the current oil production.
Re:Thank . (Score:5, Interesting)
It's those low prices which have "killed the economy". Going from $1.50 gallon to $3.50 gallon is a much bigger shock than going from $4.00 to $6.00 gallon.
Gas taxes need to be raised - at a minimum enough to pay for road infrastructure, but probably a good amount more (gradually, of course). But no-one has the balls to do it.