US Now Produces More Oil and Gas Than Russia and Saudi Arabia 416
Hugh Pickens DOT Com writes "Claudia Assis writes that the US will end 2013 as the world's largest producer of petroleum and natural gas, surpassing Russia and Saudi Arabia with the Energy Information Administration estimating that combined US petroleum and gas production this year will hit 50 quadrillion British thermal units, or 25 million barrels of oil equivalent a day, outproducing Russia by 5 quadrillion Btu. Most of the new oil was coming from the western states. Oil production in Texas has more than doubled since 2010. In North Dakota, it has tripled, and Oklahoma, New Mexico, Wyoming, Colorado and Utah have also shown steep rises in oil production over the same three years, according to EIA data. Tapping shale rock for oil and gas has fueled the US boom, while Russia has struggled to keep up its output. 'This is a remarkable turn of events,' says Adam Sieminski, head of the US Energy Information Administration. 'This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn't in a million years have dreamed about.' But even optimists in the US concede that the shale boom's longevity could hinge on commodity prices, government regulations and public support, the last of which could be problematic. A poll last month by the Pew Research Center for the People and the Press found that opposition to increased use of fracking rose to 49% from 38% in the previous six months. 'It is not a supply question anymore,' says Ken Hersh. 'It is about demand and the cost of production. Those are the two drivers."'"
Re:Importation (Score:5, Insightful)
1) Import as much as possible
2) stockpile it
3) resell later for massive profit
Geopolitics (Score:5, Insightful)
I wonder what this means for geopolitics... will the US continue to support the Saudis etc?
OTOH I expect we'll just see Jevons Paradox in action, which would mean we still need the Saudis.
http://en.wikipedia.org/wiki/Jevons_paradox [wikipedia.org]
Re:Environmentalists... (Score:5, Insightful)
No. While the long-term implications of increased production are troubling, and there should be local concern regarding fracking(I've changed my mind, real scientific evidence suggests groundwater contamination isn't uncommon), as far as the big environmental concerns go: it doesn't matter where fossil fuels come from, it matters how much are being burned.
Food (Score:2, Insightful)
So long term, we're contaminating the underground water table, which will eventually rise to the surface, and contaminate the food supply -- Can't you just wait until corn, even grown for livestock feed starts showing trace amount of these chemicals?
Or should we not worry since America doesn't make anything anymore, not even food, and we'll import all of our food from China?
People right now are all up in arms over Fukishima, but I see this fracking as much much worse for us long term -- so bad that it'll make nuclear energy look incredibly clean by comparison.
Re:Environmentalists... (Score:3, Insightful)
Religious fanatics running the country are already waging crusades under the guise of "bringing freedom and democracy to the Middle East" and defending God's chosen people. They are so reckless because they are trying to turn the book of Revelation into a self-fulfilling prophecy. Religion is lunacy!
-- Ethanol-fueled
Re:Geopolitics (Score:4, Insightful)
If the Saudis suddenly stopped selling oil to ... it would trash our allies
When you say "allies", are you sure you don't mean "markets"? I don't think the USA has allies any more - just peoples and countries who depend on it for aid and subsidies and TV programmes.
Re:Importation (Score:5, Insightful)
That strategy seems to work well for aluminium oxide, beryllium, chromium, cobalt, diamonds, ferrochromium, ferromanganese, iodine, iridium, mica, niobium, platinum group metals, talc, tantalum, thorium, tin, tungsten and zinc.
http://en.wikipedia.org/wiki/Defense_National_Stockpile_Center [wikipedia.org]
Re:Importation (Score:1, Insightful)
Did you notice that:
1) We're talking about production of quadrillions of units of things? It almost doesn't matter how small the thing is. The resulting container for your "stockpile" would be just way too big. The cost of building and maintaining a meaningful stockpile would be enormous.
2) The price of energy is not supply driven, it's currently demand driven? While this suggests that now WOULD be a good time to stockpile, if not for item 1, it also assumes that in the future, prices will again be supply driven. Given the increasing diversity of energy sources and potential for renewables to dominate energy production in the long term, its at least possible that energy will stay a demand-driven market. In other words, prices might not rise much and if it does, there are vast reserves of hydrocarbons to tap into that are profitable to extract when prices rise. This means that there won't be the sharp rise in prices that a stock-piler would depend upon.
3) "Import as much as possible" so the implication is that in the future it will be more expensive to transport energy than it is today. This contradicts the entire history of technology development. The alternative implication is that the world has gone to hell. In which case, who is going to buy your oil and gas for massive profits?
The more interesting subject is:
We're in the middle of a massive energy production boom. Energy production in any one place tends to be a boom and bust business. What portion of our income is coming from this (probably temporary) boom and what investments can we make that prepare us for the inevitable bust, or at least prepare us for a decline?
Re:Importation (Score:4, Insightful)
In related news, the USA has no plans whatsoever to do anything about the environment [wikipedia.org].
I guess that's what happens when you let J.R.Ewing, et. al. run the country [opensecrets.org].
How much is gas in Russia and SA? (Score:5, Insightful)
Saudi Arabia: $0.91 / gallon
How many billions of dollars per year do we give the oil and natural gas industry in tax breaks every year? That savings is passed on to the consumer, right? It's not like oil companies are still raking in record profits.
Since the U.S. doesn't have a state run oil company, U.S. consumers get no special benefit from oil and natural gas production in the US being at an all time high. The oil companies sell it on the open market, it doesn't matter where it came out of the ground. Furthermore, production increases in the US will not outweigh demand increases across the rest of the world.
Net result: U.S. consumers still pay the same, the U.S. Government still gives oil companies tax breaks while they laugh their ass to the bank, a lot of people's groundwater is being contaminated, and in the end we will have nothing to show for it.
Re:Bubble? (Score:4, Insightful)
I have read several articles and reports by economists and geologists claiming this fracking boom is a bubble. The estimate of 100 years worth of gas is overstated. It seems 25 years worth of gas is more likely, less if gas exports are allowed.
I don't really have an opinion on the issue as a whole, but it's worth pointing out that similar reports have been telling us for decades that the end was nigh, and yet we continue finding new deposits and/or new ways to exploit known deposits. Obviously that can't continue forever, and it seems pretty clear that there are other issues that have to be considered (e.g. climate change), but I'm pretty skeptical of anyone projecting near-term resource exhaustion.
It's always possible, of course, that this time the wolf really is here, but...
Besides that, I think anyone predicting a sudden collapse of supply is silly. That's not how the world works; you don't see all of the fields simultaneously ceasing production, instead many fields begin to decline at differing rates. The result -- when we near exhaustion -- will be that available supply gradually tapers off, which will cause prices to gradually rise in order to limit demand to available supply. Rising prices will eventually move us off of fossil fuels, if we haven't already done it for other reasons.
Re:Importation (Score:5, Insightful)
You may be forgetting that (we are told that) oil price is set in the global marketplace. "American" oil does not stay in America. This "fact" is always used to explain price increases. Increased "American" oil production will only effect oil prices in the context of global supply. "Drill baby Drill would have only marginal downward presure on prices. So it follows that "Hoard baby Hoard" would also have only marginal upward presure on oil prices. All this talk about increased American production being a boon to Americal consumers is mostly nonsense. Same applies to the argument that the Keystone pipeline would be a boon to consumers here in America. These are con jobs designed to make a very small handful of already very wealthty Americans even more wealthty. Most Americans will/would see very small price changes at the pump.
For oil this is true. The cost to ship oil is quite low, so oil produced in one country doesn't really help lower prices. The price is reasonably the same around the world.
For natural gas, this doesn't apply. Transporting large amounts of natural gas is expensive. It is energy intensive to compress and cool the gas into a liquid. Some gas is lost during the ocean journey, either as blowoff (LNG ships typically do not have liquification equipment on board, so as the gas heats up, it boils off), fuel for the ship, or both. Right now the US has huge natural gas production, but moving it outside of the US is expensive. So natural gas in the US costs ~25% what it costs in Europe, and ~35% of what it costs in Russia. The natural gas boom IS keeping gas prices very low, and in places where electricity and heating is gas, this is saving US consumers a lot of money.