The next time you hear a douchebag say we have as much oil as Saudi Arabia, remember the FACTS from the article below. If it requires tremendous amounts of heat and water to extract the oil, then it isn’t really viable. At $200 to $300 a barrel, it might be viable. EROEI is a foreign concept to idiot politicians promising $2.50 a gallon gasoline if elected. I can’t tell whether these people are stupid or lying.
Does the U.S. Really Have More Oil than Saudi Arabia?
Posted by Robert Rapier on April 4, 2012 – 11:16am
Topic: Supply/Production
The Difference Between Oil Shale and Oil-Bearing Shale
People are often confused about the overall extent of U.S. oil reserves. Some claim that the U.S. has hundreds of billions or even trillions of barrels of oil waiting to be produced if bureaucrats will simply stop blocking development. In fact, in a recent debate between Republican candidates contending for Gabrielle Giffords’ recently vacated House seat, one candidate declared “We have more oil in this country than in Saudi Arabia.” So, I thought it might be a good idea to elaborate a bit on U.S. oil resources.
Oil production has been increasing in the U.S. for the past few years, primarily driven by expanding production from the Bakken Shale Formation in North Dakota and the Eagle Ford Shale in Texas. The oil that is being produced from these shale formations is sometimes improperly referred to as shale oil. But when some people speak of hundreds of billions or trillions of barrels of U.S. oil, they are most likely talking about the oil shale in the Green River Formation in Colorado, Utah, and Wyoming. Since the shale in North Dakota and Texas is producing oil, some have assumed that the Green River Formation and its roughly 2 trillion barrels of oil resources will be developed next because they think it is a similar type of resource. But it is not.
Although the oil in the Bakken and Eagle Ford is being extracted from shale formations, the term shale oil has been used for over 100 years to describe a very different resource. This has led some to confusion over the differences between current production in North Dakota and potential production in Colorado. The oil in the Bakken and Eagle Ford formations actually exists as oil, but the shale does not allow the oil to flow very well. This oil is properly called “tight oil“, and advances in hydraulic fracturing (fracking) technology have allowed some of this oil to be economically produced. (For more details, I discuss resources, reserves, fracking, shale gas, and oil shale in some detail in my new book Power Plays: Energy Options in the Age of Peak Oil).
The estimated amount of oil in place (the resource) varies widely, with some suggesting that there could be 400 billion barrels of oil in the Bakken. Because of advances in fracking technology, some of the resource has now been classified as reserves (the amount that can be technically and economically produced). However, the reserve is a very low fraction of the resource at 2 to 4 billion barrels (although some industry estimates put the recoverable amount as high as 20 billion barrels or so). For reference, the U.S. consumes a billion barrels of oil in about 52 days, and the world consumes a billion barrels in about 11 days.
Like the Bakken, the Eagle Ford formation in Texas consists of oil (and natural gas) in tight formations that is being accessed via fracking. The amount of technically recoverable oil in the Eagle Ford is estimated by the U.S. Department of Energy to be 3.35 billion barrels of oil.
Without a doubt, these two formations are a major factor in the current resurgence of U.S. oil production. But the Green River formation is the source of talk of those enormous oil resources — larger than those of Saudi Arabia — and it is a very different prospect than the tight oil being produced in North Dakota and Texas. The oil shale in the Green River looks like rock. Unlike the hydrocarbons in the tight oil formations, the oil shale (kerogen) consists of very heavy hydrocarbons that are solid. In that way, oil shale more resembles coal than oil. Oil shale is essentially oil that Mother Nature did not finish cooking, and thus to convert it into oil, heat has to be added. The energy requirements — plus the fact that oil shale production requires a lot of water in a very dry environment — have kept oil shale commercialization out of reach for over 100 years.
Thus, while the U.S. might indeed have greater oil resources than Saudi Arabia, U.S. oil reserves (per the BP Statistical Review of World Energy) are only about 1/10th those of Saudi Arabia. The distinction is important.
Summarizing the Definitions
To summarize, let’s review the definitions for the important terms discussed here:
Oil resource — the total amount of oil in place, most of which typically can’t be recovered
Oil reserve — the amount of oil that can be recovered economically with existing technology
Oil shale — sedimentary rock that contains solid hydrocarbons called kerogen (e.g., Green River Formation)
Shale oil — the oil that can be obtained by cooking kerogen
Tight oil — liquid hydrocarbons that are obtained by hydraulic fracturing of shale formations (e.g., Bakken Formation and Eagle Ford Formation)
Conclusion: Resources are not Reserves, and Tight Oil isn’t Shale Oil
It is pretty clear that at current oil prices, developments in the tight oil formations will continue. It is not at all clear that even at $100 oil the shale in the Green River formation will be commercialized to produce oil, although a number of companies are working on it and will continue to do so. Oil shale is commercially produced in some countries like Estonia, but it is primarily just burned for power.
In order to commercially convert the oil shale into oil, a more energy efficient method of producing it must be found (or, one would have to have extremely cheap energy and abundant water supplies to drive the process). I have heard from multiple industry sources that the energy return for producing oil from oil shale is around 4 to 1 (lower than for oil sands production), and that is before refining the oil to finished products. At this sort of energy return, oil sands will continue to be a more economical heavy oil option.
Thus, my prediction is that despite having an oil shale resource that may indeed be far greater than the oil resources of Saudi Arabia (I don’t think I have seen an estimate of Saudi’s total oil resources), the reserve will continue to be close to zero for the foreseeable future because there are still many technical hurdles to overcome to realize a scalable, commercially viable process.
Finally, I would say that if a commercially viable process for shale oil production from the Green River formation is developed, the environmental blowback will be enormous. The production of shale oil is more energy intensive (i.e., has higher carbon emissions) than for the oil sands, it has a high water requirement in a dry climate, and it is potentially a huge new source of carbon dioxide emissions. The environmental protests that would arise in response to a growing commercial shale oil operation would make the Keystone XL pipeline protests pale in comparison.
Wordman says:
…evil people and impostors will go on from bad to worse, deceiving and being deceived. – 2 Timothy 3:12
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12th April 2012 at 10:35 am
Maddie's Mom says:
Say, where is ol’ Newt anyway?
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12th April 2012 at 10:56 am
AKAnon says:
Not a bad discussion. The distinction between resources and reserves is critical, although largely ignored or misunderstood by politicians and MSM (big surprise there). To go one step further, in the mining business, there are 4 categories of resources: Proven Reserves are quantity of product that are economical and feasible to recover, and defined well enough to meet industry standards of being “proven”. Probable or Likely Reserves are defined well enough to reasonably expect them to be there, but not defined to Proven standards. Possible or Inferred Reserves are pretty much pie-in-the-sky numbers-presumably economically recoverable, and based on some reasonable definition. The standards for defining reserves into one classification or another depend on the type and characteristic of the commodity and trading exchange standards. A uniform, consistent flat-lying coal seam may be considered Proven based on very widely-spaced holes, while a narrow, high-grade gold vein may not be considered proven until closely-spaced samples of the actual stope have been analyzed.
Resources are, as noted above, simply the presence of a commodity, irrespective of technological or economic feasibility of recovery. There is roughly 25 billion ounces of gold dissolved in sea water, about 8 times that recovered from mines throughout history. That doesn’t make it a “gold mine”.
3 important points: 1) A resource extraction operation does not need a lot of Proven Reserves to be viable. If the commodity is there, whether to “Prove it up” by drilling is a business decision. The Keno Hills silver mine operated for scores of years while never having more than 2 years Proven Reserves blocked out.
2) Because of the “economic” factor in defining reserves, the status of resources is dynamic. In a marginally economic deposit, increased operating costs (say, fuel) or a drop in commodity prices turn reserves into resources, by definition, and vice versa. Any reporting of Reserves needs to be couched by the economic assumptions by which they are calculated.
3) The biggy that the politicians simply do not get (or choose to ignore)-EROEI. If the energy required to recover an energy resource exceeds the energy value of the resource itself, it is a net loss. “I’m taking a loss, but make it up in volume” comes to mind. If it costs you a buck fifty to make a dollar, there is no “price” for dollars that makes this a profitable venture. If it takes 200 Btus to recover 100 Btus worth of oil, it is not going to be profitable on an energy basis.
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12th April 2012 at 10:57 am
Tampa Gold says:
Both Jimmy.
The are both stupid and lying.
I would hazard to say pandering and scrambling to bring gas prices down.
Filled up the F-250, 15 five gallon gas cans, and 4 five gallon diesel cans yesterday. Only set me back around 450 or so. Yay Kroger gas discount!
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12th April 2012 at 11:17 am
AWD says:
It’s propaganda to get government subsidies (free cash and tax breaks). Oil industry propaganda ministers are some of the best in the business, as are their lobbyists. They get billions from Uncle Obama and taxpayers every year.
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12th April 2012 at 11:40 am
DaveL says:
“Does the U.S. Really Have More ( or as much) Oil than Saudi Arabia?”
I have 2 billion dollars.
One billion is sitting in a glass box that you can get at by hitting the box with a hammer.
The other billion is sitting in a glass box that is surrounded by twenty foot thick reinforced concrete walls. It will be a lot harder to get that billion with that hammer, but the billion is there.
So, do I have two billion dollars, or don’t I?
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12th April 2012 at 11:57 am
Kill Bill says:
The next time you hear a douchebag say we have as much oil as Saudi Arabia,…-Admin
I call that the Jed Clampett mentality.
“Then one day he was shootin’ at some food,
And up from the ground came a bubblin’ crude.
Oil that is, black gold, Texas tea”
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12th April 2012 at 12:37 pm
Kill Bill says:
DaveL. I would say that you would have more than two billion given that sweet low hanging fruit comes cheap and tough sour high hanging fruit, ironically, would be worth more.
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12th April 2012 at 12:46 pm
Kill Bill says:
Say, where is ol’ Newt anyway? ~MM
Thats like saying Betelgeuse three times.
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12th April 2012 at 12:47 pm
Ron says:
I talked with an guy that told me about oil floating on the surface in saudi,he said the arabs didnt like it getting on theyre camels hooves and would light oil on fire thinking to burn it off.
Yes our oil is harder to get out of the ground and money wise oil from the middle east is more profitable,in a way.But we havent tried to get it from places that are known to have it.Alaska and California have much oil,but how much is off limits for one reason or anouther.
I wonder about natural gas and how it would help out the country.
Our local station went from 4.09 to 4.39 in a week for gas. And our country using diesels in small cars,why not more of them?My cousin has a four door yaris with an automatic and gets 44 mpg.The same car in europe with an diesel gets 78 mpg.
I still wonder how folks in our town with old four wheel drive trucks can afford to drive them
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12th April 2012 at 1:25 pm
DaveL says:
Bill, it’s still only two billion dollars. The fact that you have to work harder, or it costs more in time and effort to get it, doesn’t increase the supply of it.
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12th April 2012 at 2:51 pm
AKAnon says:
DaveL-Suppose it costs you $1.1B to retrieve your difficult billion. Yes, you have it (technically), but you’d be a retard to get it.
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12th April 2012 at 4:09 pm
Stucky says:
DaveL
Your dollar/oil analogy is bullshit. Here’s why, in terms I hope you understand.
You have two brain cells.
One does ALL the work.
The other does nothing.
Mathematically, you have two brain cells.
But, EFFECTIVELY, you have just one.
Same with oil.
Got it?
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12th April 2012 at 4:19 pm
DaveL says:
Why the is it so difficult for some people to look at the original headline question?
Does, or does not the U.S. have as much or more oil than Saudi Arabia? Probably does, but we don’t have the technology/finances to retrieve it at anywhere near the rate and cost the Saudis do. That doesn’t mean there less fucking oil there, just less for current use.
AKAnon says:
DaveL-Suppose it costs you $1.1B to retrieve your difficult billion. Yes, you have it (technically), but you’d be a retard to get it.
So technically we have as much, but technically we don’t?
Stucky…My airplane has a regular gas tank and a reserve. My last flight I only used the gas in the regular tank, so effectively, I only had one tank.. In reality people use only 10% of their brain cells, so effectively their brains are ten times smaller they are? When it’s dark and I can’t see anything, effectively there is nothing there?
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12th April 2012 at 9:41 pm
Kill Bill says:
Bill, it’s still only two billion dollars. The fact that you have to work harder, or it costs more in time and effort to get it, doesn’t increase the supply of it. -DaveL
I understand Dave. You suggested that oil was, in effect, dollars. I agree that costs rise as to how much it costs to extract oil. But since the oil, as low hanging fruit goes on the by and by the oil, in your metaphorical concrete bunker, increases in value. I was implying that your dollars do not increase in amount but do increase in value. =)
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12th April 2012 at 10:07 pm
Bruce says:
Eagle Ford Shale, Bakken Shale, Barnett Shale, this Shale that Shale, what ever shale. The big producers you hear about in the Bakken Shale don’t even produce from shale but from formations of dolomite between the upper and lower shale and the deposition of the dolomite is far more limited than the vast area of worthless shale. You probably can’t get a piece of one of these deals going in to that dolomite anyway unless you have some connections. The working interest owners in prospects like these mostly are oil companies, a few very wealthy individuals and bankers. Yes you can get some oil and gas out of shale. Now show me an investor, just one investor who even made even half his money back on a shale well and I’ll show you someone who should be on an endangered spices list they are so rare. All Shale is crap, and the Green River shale is even more crappy than normal shale. Shale wells are for promotional fees, mark ups, AFE packing, commissions and operating fees. When it comes to shale plays its about investor production not oil and gas production. So many morons with money believe the BS and can not be persuaded to look at the reality of shale production. There are two kinds of oil deals and they are always promoted to some degree no matter what anyone tells you. 1. Good prospects = High Risk Wildcats and 2. Low Risk sure hit can miss stuff like Shale Deals, Reworks, Infield drills and developmental prospects. All are doomed to fail before the the iron is ever on the ground and excessively promoted. The only developmental projects that make sense are those offsets to a wildcat you originally had a piece of and the only reworks or infield wells are on leases you already have developed off your original wildcat. And there is no sensible reason to to put money in to a shale deal no matter what or where. I can assure you that when these sure thing projects do make good sense the operators and / or the original investors are not selling off their working interest to idiot brokers and moron investors.
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12th April 2012 at 1:15 am
Jeremy Boak says:
This is a good summary. I am pleased to find my point about the historical priority of “shale oil” as a term for the product of retorting of “oil shale” getting out into the blogosphere. My parallel term for the oil being produced from oil-bearing shale formations like the Bakken Formation is “shale-hosted oil.” Dealing with the complexities of what label to apply to interbedded quartz-rich and dolomitic mudstone and siltstone is best left to serious technical discussions. Bruce’s attempt to simplify and sloganize the geology of the Bakken adds little light and a lot of heat.
The oil shale in the Green River Formation is a very large amount, and commercial production in this country has been limited to about 6,000,000 barrels in the 1980s by Unocal. But commercial production has occurred in other countries less well endowed in hydrocarbon resources than the U. S. for many decades. Currently, efforts to permit, design, and build oil shale operations are underway in Utah (as well as Jordan and Australia). They will start small. Surface retorts are making shale oil in China, Estonia, Brazil and Australia.
The U. S. resources are large, but significant fractions are of such low grade that it is likely to be a very long time before they are produced. In Colorado, of 1,500 billion barrels of potentially producible oil, about 350 billion are of the richest, most readily commercialized grade (>25 gallons per ton), with another 570 billion barrels of a lower grade (15 gallons per ton), some of which might be produced because it is interbedded with the richer material. This amount does not account for the recovery factor, which would reduce these numbers further. Still it is more than the Saudi reserves.
I have not seen a recent estimate of the Saudi resources, which might actually be larger than the Colorado amount. The total Utah oil shale resource of 1320 billion tons has not been analyzed for the two cutoff grades above, but the Wyoming resource of 1520 billion barrels only includes about 130 billion barrels of the lower grade described above. I expect Utah to be somewhere in the middle o these two amounts – richer than Wyoming, but leaner than Colorado. The numbers are large, and the effort required is large. Oil shale is neither a fools errand nor the energy Holy Grail some hold it out to be. The shale-hosted oil rush is already a more radical and fast-moving change to our supply of fossil fuels.
Jeremy Boak, Director
Center for Oil Shale Technology and Research
Colorado School of Mines
Golden CO
Viewpoints are mine, not positions of the Colorado School of Mines
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12th April 2012 at 12:13 pm
Administrator says:
Jeremy
At what price per barrel extracted would this be profitable. I believe that is the real question.
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12th April 2012 at 12:21 pm
DaveL says:
.Kill Bill says..” I was implying that your dollars do not increase in amount but do increase in value.”
And my answer wasn’t attaching a value to anything. I was merely stating that the amount of something doesn’t increase, or decrease, just because you can’t use it or get to it. I didn’t write the headline to the story.
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12th April 2012 at 12:30 pm
Hey dumb dumb, says:
Have you ever heard of technology? The Canadian oil sands a short period ago was another resource that would never be tapped because it was too expensive.
Perhaps you are the idiot.
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12th April 2012 at 12:09 am