The surge in U.S. crude oil production over the past few years
and overwhelmingly positive outlooks for continued output growth
have inspired an almost unprecedented sense of complacency that
our nation's energy woes are over for good.
Domestic crude production reached its highest annual level
since the late 1980s last year and could hit its highest all-time
level by 2016, according to some projections. But before you rush
off and buy the biggest SUV you can find, you may want to take a
closer look at the cold, hard facts about how much crude oil the
U.S. really has and how long it will last.
Photo credit: LINN Energy
U.S. oil reserves highest since 1970s
According to the US Energy Information Administration (
), U.S. proved reserves of crude oil and lease condensate (a type
of ultralight crude) rose by about 4.5 billion barrels, or 15.4%,
last year to 33.4 billion barrels. That's the highest level since
The main reason behind this rapid growth in reserves is the
explosion of activity in Texas' Eagle Ford shale and Permian
Basin and North Dakota's Bakken shale. Basically, improvements in
drilling technologies made it economical to exploit previously
inaccessible resources within these fields.
The fact that domestic reserves are the highest they've been
since the late 1970s is certainly reason for optimism. These
reserve additions aren't due to luck, but rather due to heavy
investments in technology made by U.S. energy companies over the
past several years. Without those technological improvements, it
wouldn't have been possible to economically harvest these
How long will these reserves last?
Now for the less cheery news. At the current pace of drilling,
these reserves aren't going to last for more than a decade or
two. Let's do the math. Last year, annual crude production
averaged just under 7.5 million barrels per day, which comes out
to a little over 2.7 billion barrels for the year. Assuming we
deplete reserves by 2.7 billion barrels each year, current
reserves would run dry in less than 13 years.
Of course, that calculation is very simplistic because it
assumes production will remain constant and we won't add any new
reserves. Still, the point I'm trying to drive home is that even
though U.S. oil production now exceeds every other country except
Saudi Arabia and Russia, the size of our reserves is much
Currently, we rank 12th among the top 20 countries by
proven crude oil reserves. That places us just ahead of China and
Qatar, but below Libya and Nigeria. By contrast, Russian oil
reserves are estimated to be 80 billion barrels, while the Saudis
claim they have some 270 billion barrels remaining.
Technology holds the key
Now here's what could completely change things: technology. Just
as technological progress has helped boost our recoverable oil
estimates in recent years, it should continue to do so in coming
years. Consider the Bakken, for instance. Currently, the play is
estimated to contain total reserves of 150 to 900 billion
barrels, according to Continental Resources, a leading Bakken
While only 3.5% of these total reserves are currently
recoverable using existing technology, technological progress
could improve that recovery rate significantly and, with it, the
volume of recoverable reserves. According to Pete Stark, senior
director and advisor for upstream research at research and
consulting firm IHS, further technological advances could boost
Bakken recovery rates to as much as 12%-16% within a decade. That
would provide a big boost to proved reserves.
The bottom line
There's no denying that the shale boom has been a remarkable
game-changer for U.S. hydrocarbon production, as well as for our
nation's trade balance and geopolitical leverage. But shale oil
won't last forever; in fact, shale oil production could peak in
as little as five years given the higher decline rates associated
with shale wells.
That's why it's important to keep things in perspective and
realize the shale boom isn't a panacea to the nation's -- or the
world's -- most gripping challenge: our addiction to fossil
fuels. It's merely a bridge that extends the amount of time we
have to develop sustainable forms of energy that can power our
planet without emitting massive quantities of carbon dioxide,
raising the global temperature, and harming our environment.
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Crude Oil in America: How Much Do We Really Have
and How Long Will It Last?
originally appeared on Fool.com.
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