The illusion of vast undeveloped U.S. oil resources
By Roger Blanchard
There has been a relentless stream of discussion on talk radio and
articles in the mainstream media that claim that if only all of the
U.S. were opened for oil development, we would have plenty of U.S.
oil. No amount of evidence would convince those promoting this idea
that it is not correct, but there is ample evidence that the U.S. is
in terminal decline and opening all remaining lands and waters to oil
development would at best only slow the inevitable decline.
Those promoting the idea that the U.S. has plenty of oil state that
the United States Geological Survey (USGS) and Minerals Management
Service (MMS) estimate huge amounts of oil in the Arctic National
Wildlife Refuge (ANWR), federal offshore waters, National Petroleum
Reserve-Alaska (NPR-A) and anywhere else that is not presently open to
oil development.
The numbers that USGS and MMS provide are indeed quite impressive but
those organizations have a history of greatly exaggerated oil reserves
estimates. The USGS=92s 1995 oil and gas *****sment for the onshore
United States is an illustration of their tendency to exaggerate.
Based upon the USGS=92s 1995 *****sment for the U.S., the onshore US/48
had 82.8 Gb of technically recoverable oil after Jan. 1, 1994.
***ulative production from the region was 145.4 Gb, as of January 1,
1994. Production for the onshore US/48 peaked in 1971 at 8.40 mb/d. By
2001, production had declined to 3.10 mb/d. During the 1992-2001
period, oil production from this region declined at an average rate of
4.5%/year. Based upon a continuation of that decline rate, the
ultimate recovery for the region would be 180.2 Gb and the amount of
oil recoverable after January 1, 1994 would be 34.8 Gb. The USGS
*****sment had concluded that about 2.4 times that amount of oil is
technically recoverable after January 1, 1994 from this region.
As for the MMS, it estimated that the undiscovered technically
recoverable amount of oil in the Gulf of Mexico (GOM) was 37.1 Gb, as
of January 1, 1999. The 37.1 Gb figure is for discoveries in all of
the GOM, but most of the oil would be =93discovered=94 in the deep-water
GOM since the shallow-water GOM in the western and central gulf has
been extensively explored and the eastern GOM is not oil prone.
Deep-water GOM production increased from 151,000 b/d in 1995 to about
960,000 b/d in 2003. Since then production has languished due to
hurricanes and rapidly declining production from older fields. Between
the middle of 2007 and the end of 2008 four fields=97Thunderhorse,
Tahiti, Neptune and Atlantic=97are expected to come on-line and bring a
projected summed peak production of approximately 600,000 b/d,
assuming all goes well. This should cause a relatively minor increase
in U.S. production to 2010.
Beyond those 4 developments, only two +50,000 b/d projects are
scheduled to come on-line through 2012: Shenzi (2009 at 100,000 b/d
peak) and Perdido (Great White, Tabago, Silvertip fields-2010 at
130,000 b/d peak). In the meantime, the older fields in the deep-water
GOM will continue to decline, probably at rates greater than 15%/year.
Because of the nature of deep-water oil production, where fields reach
maximum production quickly and then go into rapid decline, it=92s hard
to imagine that deep-water GOM oil production will peak after 2010. It
typically takes 6 years or more for a deep-water field to reach
production after the decision to develop; frequently it takes longer
due to problems that pop up.
At this point, it appears realistic to expect an ultimate producible
volume of oil from deep-water GOM fields to be on the order of 10 Gb,
certainly not >30 Gb.
In their Annual Energy Outlook 2007, the US DOE/EIA projected that
deep-water GOM production would increase to 2.0 mb/d in 2015 and then
fluctuate between 1.8 and 1.9 mb/d out to 2030. That is totally
unrealistic. The US DOE/EIA bases their production projections on
*****sments from the MMS and USGS.
I frequently hear calls for all federal offshore waters to be opened
to development, as if that will be our salvation. The most
geologically favorable areas off the Atlantic coast have been explored
in the past with no significant discoveries. If Atlantic federal
waters were opened for development, it=92s likely that no oil or next to
no oil would ultimately be extracted. The same would be the case for
Pacific waters from north-central California north to the Canadian
border as well as around most of Alaska.
Concerning the National Petroleum Reserve-Alaska (NPR-A), the Clinton
administration opened ~4.6 million acres to oil exploration and
development in the late 1990s. Lease sales occurred in 1999 and 2002
in the northeast quadrant but only ~330 million barrels of oil have
been discovered in that area. That corresponds to ~15 days of U.S.
liquid hydrocarbons consumption. Production from the ~4.6 million
acres started last year but that hasn=92t even reversed the production
decline in Alaska. According to a USGS *****sment, the area has 3.1 Gb
of technically recoverable oil.
Based upon a MMS *****sment, the Beaufort and Chuchi Seas off northern
Alaska have 24.9 Gb of technically recoverable oil. Presently the
Northstar field, just off the coast, is the only offshore field
producing oil. Since 1970, over 99,000,000 acres of the Beaufort and
Chuchi Seas has been offered in oil and gas lease sales and as of
2003, there were active leases on over 140,000 acres.
Some believe that the oil industry didn=92t have the capabilities to
explore for oil in the Arctic Ocean until recently, but back in the
early 1980s a huge structure about 65 miles northwest of the Prudhoe
Bay field, in the Arctic Ocean, was drilled. In December 1983 the
structure was breached only to discover it was filled with salt water,
the infamous $2 billion Mukluk dry hole.
The Bush administration has opened large areas of Bristol Bay
(Alaska), NPR-A (Alaska), western federal lands and the central and
eastern Gulf of Mexico. In the case of Bristol Bay, oil exploration
occurred there some years ago without finding any significant oil. The
administration is also attempting to reopen the Chuchi Sea (Alaska) to
oil development. Contrary to what one hears or reads from the media, a
lot of federal lands and water have been opened for oil exploration
and development in recent years.
If all federal lands and waters were opened to oil development, the
most probable production profile would look something like Figure 1.
Opening the Arctic National Wildlife Refuge (ANWR) and all federal
waters would create a minor hump in the decline curve.
Desperate people do desperate things. As Americans become more
desperate for oil, I expect that ANWR and offshore areas will be
opened for oil development. It will be like burning the furniture to
keep the house warm in mid-January. It will be a desperate move that
won=92t result in much.
Roger Blanchard is Assistant Professor of Chemistry at Lake Superior
State University, Sault Ste. Marie, Michigan. Roger is the author of
"The Future of Global Oil Production: Facts, Figures, Trends and
Projections by Region" published by McFarland & Company (2005)
(Note: Commentaries do not necessarily represent ASPO-USA's positions;
they are personal statements and observations by informed
commentators.)
Article found at :
http://www.energybulletin.net/newswire.php?id=3D44870
Original article :
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