Friday, September 16, 2011

A gentle cough for CBS and the National Petroleum Council

I was flipping through the news channels last night and came in on the tail end of a CBS story about billions of barrels of oil in Texas. Having missed the introduction, it was not until this morning that I discovered that it was a story about the Eagle Ford Shale.
Energy companies are rushing to the area to tap deposits that could produce up to 12 billion barrels of oil, and enough natural gas to power every American household for at least five years.

By 2020, that number (of new jobs) is expected to increase to 66,000.
I remember writing a short post on the Eagle Ford last December pointing out that the field was currently being more actively developed in the “wet gas” region where the Natural Gas Liquids (NGL) content is high, since this was more profitable than the deeper “dry gas” sections. But I did not remember the numbers being that high.

Being curious about them, a check at the EagleFordShale Web site suggests that the CBS report was triggered by a report from the National Petroleum Council, which was released yesterday. That report had been requested by Energy Secretary Chu to
reassess the North American natural gas and oil resources supply chain and infrastructure potential, and the contribution that natural gas can make in a transition to a lower carbon fuel mix . . . . .(provide) advice on policy options that would allow prudent development of North American natural gas and oil resources consistent with government objectives of environmental protection, economic growth, and national security (and) the United Sates sees a future in which valuable domestic energy resources are responsibly produced to meet the needs of American energy consumers consistent with national, environmental, economic and energy security goals, ... [and the United States] has the opportunity to demonstrate global leadership in technological and environmental innovation. Accordingly, I request the Council’s advice on potential technology and policy actions capable of achieving this vision.
The report notes that “The United States and Canada together produce 4% more oil than Russia, the world’s largest producer.”

Leading World Oil Producers (NPC using BP Statistical Review).

Further, together with Canada, the report points out that the United States produces over 25% of global natural gas production, with the arrival of shale gas being the game changer that may provide over 100 years of supply at today’s demand rates.

Leading World Natural Gas Producers (NPC using BP Statistical Review)

Yet it is in the discussion of those reserve numbers that the shaky timber on which the NPC case is build becomes apparent. When discussing future oil production it notes:
One source is tight oil, found in geological formations where the oil does not easily flow through the rock, such as in the Bakken formation of North Dakota, Saskatchewan, Montana, and Manitoba. Tight oil has also benefited from technologies similar to those used for shale gas, including hydraulic fracturing. Over the next 20 years, tight oil production could continue to grow. A second potentially large supply source is in new offshore areas, particularly in the Gulf of Mexico and the Atlantic and Pacific coasts of the United States and Canada. Access to and potential development of these new U.S. areas would require an Executive Branch level directive to include such areas in the 2012–2017 Leasing Program. New offshore areas could provide both natural gas and oil in significant quantities to supplement the continuing strong production in the Gulf of Mexico. Third, new Arctic oil and natural gas supply have a potential of the equivalent of over 200 billion barrels of oil. This is in addition to existing oil supply and proven natural gas reserves on the Alaska North Slope. The new Arctic resources could yield significant supply after 2025. Fourth, another very large long-term oil supply source lies in the shale oil deposits of Colorado, Utah, and Wyoming. The development of these billions of barrels of oil from these new resource areas will require sustained investment, substantial advances in technology, and environmental risk management systems and approaches.
The report also supplies this estimate of the available natural gas, showing several estimates.

Estimates of the Technically Recoverable Natural Gas Available in the United States. (NPC )

I have recently written of the Bakken Shale, and the problems that I see with its long term production. I have also similarly discussed some of the problems with the Arctic development and the potential size of the reserves available. ) In the later case I noted that the recent USGS report had downgraded, as an illustration, their initial estimate of 10 billion barrels of oil being technically recoverable from the National Petroleum Reserve, to a current estimate of 500 million barrels of economically recoverable oil. That percentage difference between the actual recoverable, relative to the technically recoverable is in line with a 6.9% estimate of the economically recoverable (relative to technically) volumes of natural gas, which I pointed out when I reviewed the EIA Shale Gas report.

If one were to look at these numbers in that light (though the actual detailed resource section with its break down is not yet available from NPC) then the numbers become more credible. Unfortunately it makes the estimates of the contributions that the industry will make to national energy security and job creation a whole lot weaker, if the numbers are only one-twentieth of those which are currently being thrown around.

Unfortunately the report goes on to spend much more time discussing the environmental aspects of oil and gas recovery, and emphasizing such things are the reduction in pad size in the Arctic:

Change in Arctic Pad Size with Improved Technology (API

There is not that much that is encouraging in the way of new technology that is anticipated to come on line to increase the percentages of natural gas and oil that can be recovered, and the report does comment on the need for more graduates as the current work force retires – a need that is not being adequately filled.

It is a weak straw on which to build the projections that CBS used.


  1. Regarding new technology that is anticipated to come on line to increase the percentages of natural gas and oil that can be recovered, were 3D seismic, horizontal drilling and fracking technologies anticipated before their effect was proven by allowing previously unrecoverable formations to be produced cost effectively?

  2. Those technologies, in one form or another have been around for some time, and so there was a logical progression to their wider use. I am not that sure that there are are as significant a set of new technologies now being introduced that will lead to the breakthroughs of the future.

  3. oil and gas investment is watching developments of reserves in and across the borders of these United States