In 1956, M. King Hubbert established the first scientific model behind peak oil to accurately predict the height of U.S. oil production. Hubbert, a well-known geologist, theorized that oil production would peak between 1965 and 1970.
In 1971, oil production did indeed peak. And, for the last fifty years, Hubbert’s theory has held true as global oil production has been in gradual decline since that time. However, new discoveries in the Gulf and the rise of unconventional resource plays across the nation are drilling a metaphorical hole in the peak oil argument. America’s newfound resources are not only challenging peak oil, they are also building the case for U.S. energy independence.
According to data from the U.S. Energy Information Agency (EIA), U.S. oil production peaked at 9.6 million barrels, and despite short-term reversals, has been in constant decline to 4.95 million barrels per day by 2008. But, today we see oil production on the rise.
U.S. oil production has seen a gradual increase to approximately 5.5 million barrels per day. A large portion of this increase has come from oil shale plays like the Bakken in North Dakota and the Eagleford in south Texas. On top of that, we are producing more natural gas than ever in history. In this year alone, we will have produced nearly 30 trillion cubic feet of natural gas from offshore and onshore resources.
Without question, the use of horizontal drilling and hydraulic fracturing has unleashed these vast reserves and led to the inevitable lowering of US dependence on imported oil by a quarter from 60% of overall oil consumption a few years ago to about 46% currently.
On December 6th, the Institute for Energy Research released a groundbreaking report claiming that the amount of oil that is technically recoverable in the U.S. is more than 1.4 trillion barrels, with the largest deposits located offshore, in portions of Alaska, and in shale deposits throughout the country. The report estimates that when combined with resources from Canada and Mexico, total recoverable oil in North America exceeds nearly 1.7 trillion barrels.
To put this into perspective, the largest producer in the world, Saudi Arabia, has about 260 billion barrels of oil in proved reserves.
It’s suggested that the technically recoverable oil in North America could fuel the U.S. with seven billion barrels per year for almost 250 years.
So, what does this mean for our energy future? For starters, it could mean the end of our reliance on imported oil from unfriendly nations.
In April 2006, Saudi Aramco admitted that it’s facing a national composite oil production decline of 2% per year, and its mature fields are declining at a rate of 8% per year. Additionally, OPEC has estimated that the world’s production of nonconventional oil will reach 8.4 million barrels a day by 2035. By then, they estimate that 6.6 million (or nearly 80 percent) of that will be produced in North America.
The global energy balance is shifting and the U.S. could soon find itself at the top of list of the world’s oil and gas producing countries.
While primary global sources of energy are in decline, the U.S. is experiencing a renaissance in fossil fuel production.