Many environmentalists and anti-business people in the U.S., most centered in the Democrat Socialist Party, were sure that the U.S. production of oil and gas was going to rapidly dwindle. It was one of their many reasons for attacking U.S. oil companies as dinosaurs of the past. It was time to make these dinosaurs extinct, at least with a government-controlled and accelerated culling and size-reduction plan. Oil and gas when burned both produced the fatal gas carbon dioxide, which was claimed to be slowly or not so slowly killing the planet. We were told that the only energy that made sense was the so-called renewable energy sources of windmills, photovoltaic devices, and all sorts of plants grown for fuel. These people backed Obama for the presidency in 2008 and were rewarded as he allowed less and less production of oil and gas on the incredible acreage of federal lands and in the many off-shore areas controlled by the federal government. Meanwhile, windmills and photovoltaic device arrays were offered subsidies and mandates with claims they would replace coal, oil, and gas in large part soon.
Because the renewable sources of energy proved, as I and many others said they would, to be expensive and unreliable, they have effectively proven to be non-renewable. Investments in these energy sources have often failed and when they did not, it was only because of the subsidies and mandates that they managed a slow growth in energy output capability. Let us compare the oil dinosaur in vigor:
The production information is from the U.S. Energy Information Administration. The year at the bottom of the dip is 2008 when production was 1,829,985,000 barrels of oil, well down from the maximum production in 1970 of 3,517,450,000 barrels. As the fracking revolution in oil production began, Obama was off-setting its initial gains by restricting oil production on federal lands. In 2011, however, fracking oil production on private lands really took-off. In 2015, oil production in U.S. fields was back to 3,436,515,000 barrels of oil. Now, with the blessed end of the Obama Regime and the apparent desire of OPEC to give up its ruinous price war on oil, there is nothing to keep oil production in the U.S. from continuing to increase. An end to the suppression of U.S. energy production heralded by the Trump administration and a Republican Congress as well, will be a great boon to the U.S. economy.
The story of shale oil production in the U.S. is shown below:
U.S. oil production already appeared certain to soon exceed that at its prior peak of 1970. But at some point the Bakken and Eagle Ford and other known shale oil fields are likely to see lowered production. Will other undiscovered oil fields take their place? Yes!
In September, Apache Corp. announced that it Alpine High field in an area of the Permian Basin in West Texas holds 1.1 – 2.7 billion barrels of recoverable oil at current prices. This area had been drilled many times by other companies with no finding of economically recoverable oil.
Then comes the blockbuster announcement by the U.S. Geological Survey (USGS) that the Wolfcamp Shale in the Midland Basin portion of the Permian Basin has 20 billion barrels of recoverable oil at current prices and 16 trillion cubic feet of natural gas. Compare this to the largest oil producing field in North America, the Prudhoe Bay field of the north slope of Alaska with the 12 billion barrels of oil produced over 43 years. The largest producing field in the Lower 48 is the East Texas oil field, which has produced 7 billion barrels of oil since the early 1930s. The Wolfcamp Shale is now expected to produce nearly 3 times the oil of the Bakken – Three Forks capacity according to the USGS assessment in 2013. The Wolfcamp Shale capacity is nearly 19 times that of the Eagle Ford field according to its 2012 assessment by the USGS.
Over time, the USGS estimates prove to be low due to increased knowledge about the oil field geology and to improvements in extraction technology. How true this is, is clear from the fact that Midland, Texas is well within the Wolfcamp Shale area. This huge discovery is entirely based on new technology, not on a failure of many an oil company to examine the area for its oil possibilities. Recall that George W. Bush spent his oil years in Midland, which had been an oil center prior to his arrival.
At current prices, the Wolfcamp Shale oil is worth about $900 billion. Pioneer Natural Resources has drilling rights on 785,000 acres within the large field. ConocoPhillips has Wolfcamp Shale holdings of 1.8 billion barrels.
I am sure that President Trump will be very happy to claim credit for all the new jobs that will be produced by the production of the Wolfcamp Shale! Assuming he does not act as Obama has to try to suppress oil production, I suppose we will have to give him a portion of the credit, though in a healthier context we would give all of the credit to the oil field innovators and production experts of our wonderful private sector.