When and how did the “oil and gas boom” begin?
The event that triggered the Texas Oil Boom is generally attributed to the discovery of a massive oil reserve at Spindletop near Beaumont, Texas, in 1901. Spindletop or “Gusher” became the most productive oil field in the world and the subsequent rush to discover more oil, primarily in Texas, resulted in the United States supplanting the former natural resource powerhouse, Russia, as the leading oil producer in the world.
It can be argued that a key milestone to the current oil and gas boom was an innovative process called slick-water fracturing (“fracking”) pioneered by Mitchell Energy. Fracking resulted in the first economically feasible shale fracture that took place at the Barnett Shale in north Texas in 1998. Since then natural gas from shale has become the fastest contributor to total primary energy in the United States, much like what the Spindletop oil reserve discovery and subsequent oil drilling frenzy contributed in its time.
The IEA says the United States will be the world’s top producer of oil by 2020. How is that possible?
One way to come to grips with forecasts that the United States could become the world’s top producer of oil by 2020 is to compare current domestic production levels to the leading oil producing countries in the world.
Many people are not aware that the United States is the third-largest producer of oil in the world. According to IEA statistics, in 2011 Saudi Arabia produced 11.2 million barrels per day (bpd), Russia 10.2 million bpd, and the United States followed closely with 10.1 bpd. China and Iran rank a distant 4th (4.3 million bpd) and 5th (4.2 million bpd), respectively.
Based on the aforementioned statistics, for the United States to become the world’s top producer of oil, it would need to produce an additional 1.1 million bpd. The necessary oil resources for that type of production increase are expected to come primarily from unconventional shale oil (“tight oil”) reserves discovered in North Dakota, Montana, and Texas as well as from the ongoing development of conventional offshore resources in the Gulf of Mexico.
Based on information I gathered from various sources, the production of oil from the Bakken basin (which spans through North Dakota and parts of Montana) is currently at 400,000 bpd and could reach one million bpd by 2020. The Eagle Ford basin in Texas has a current production of 100,000 bpd and could reach 450,000 bpd by 2015. Bakken and Eagle Ford production alone would thus yield an additional 950,000 bpd and, when factoring in other conventional and unconventional reserves, it is then feasible to conclude that the United States would be able to surpass Saudi Arabia as the world’s top oil producer. The former assumes that Saudi Arabia is not able to increase its production levels. In fact, a 2011 article by The Wall Street Journal concluded that United States oil production could increase by 25 percent, which equates to approximately 2 million bpd
The U.S. is also the world’s top energy consumer. When will increased domestic oil and gas production catch up with our needs?
The United States gobbles up an astounding 95 quadrillion Btu of total annual primary energy, while it produces 73 quadrillion Btu. By comparison, China consumes 90 quadrillion Btu and produces 82 quadrillion Btu; Russia consumes 27 quadrillion Btu and produces 50 quadrillion Btu; and Saudi Arabia consumes 8 quadrillion Btu while producing 23 quadrillion Btu. The referenced energy statistics show that the United States has the largest foreign energy dependence in the world by a significant margin, i.e., 22 quadrillion Btu of total annual primary energy. Russia produces nearly two times as much total annual primary energy than it consumes, while Saudi Arabia produces nearly three times as much.
A 2012 EIA report estimates that the United States will be nearly self-sufficient in energy by 2035, which means that the U.S. will be able to generate an additional 22 quadrillion Btu of total annual primary energy based on current supply and demand statistics.
How is hydraulic fracking contributing to this increased domestic energy supply?
The technological advancements that have taken place over the last 20 years, which ultimately resulted in the establishment of fracking as an economically feasible method of accessing fossil fuels, is arguably the biggest single reason why today we are talking about the United States becoming energy independent. Specifically, fracking for shale gas could result in the United State becoming a net exporter of natural gas in the next decade.
What are the benefits of fracking and why do environmental advocates oppose it?
A clear benefit to fracking is it provides access to formerly inaccessible hydrocarbons, which essentially means that we can extract previously difficult to access resources to produce the energy needed to become less dependent, ultimately independent, on foreign energy sources.
The process of fracking involves the propagation of fractures in a rock layer as a result of the action of a pressurized fluid. The process creates conduits along which gas and petroleum from source rocks migrates to reservoir rocks where the resource is accessible for extraction. Because of the invasive nature of the fracking process, it has come under scrutiny internationally with some countries suspending or even banning it completely.
Environmental advocates oppose fracking because of risks related to, but not limited to:
- Potential of groundwater contamination
Risks to air quality during the extraction process
Migration of gases and fracking chemicals to the surface
Surface contamination from spills
There is, however, evidence that certain shale oil and gas companies are making efforts to minimize environmental problems. For example, companies are developing programs to provide state regulators with access to state-of-the-art environmental assessment technologies in collaboration with universities. They are also participating in programs like FracFocus, which is an initiative led by the Interstate Oil and Gas Compact Commission and Ground Water Protection Council under which companies disclose the chemicals they use in the fracking process.