US Chamber of Commerce Blog
Hail, shale! Viva la fracking!
Not only is the United States the top producer of petroleum and natural gas, a new report shows, but the U.S. also has the largest oil reserves of any country on earth--more than Russia and Saudi Arabia--The Financial Times reports:
Rystad Energy estimates recoverable oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264bn barrels. The figure surpasses Saudi Arabia's 212bn and Russia's 256bn in reserves.
The analysis of 60,000 fields worldwide, conducted over a three-year period by the Oslo-based group, shows total global oil reserves at 2.1tn barrels. This is 70 times the current production rate of about 30bn barrels of crude oil a year, Rystad Energy said on Monday.rystad_oil_reserves.png Rystad chart: Top oil reserves countries.Source: Bloomberg.
Chart: U.S. oil production: 2007-2016.Source: Atlas.
The combination of hydraulic fracturing and horizontal drilling has made oil and natural gas trapped in shale rock--once practically impossible to reach--now technologically feasible to produce. The result has been a gusher of increased oil production over the past few years.
Fracking’s importance won’t be going away anytime soon. The Rystand report finds that 30% of global recoverable oil is “unconventional”—meaning fracking will be needed to get it out of the ground.
In the U.S. more than 50% of its oil reserves are unconventional. Texas, home of the Permian Basin where fracking is used in the country’s most-productive oil patch, holds more than 60 billion barrels of oil.
Confused About Fracking? Learn more. Chamber Explainers will get you up to speed.
Here are two points to take from this news.
First, state-led regulation of fracking is working at safely producing abundant amounts of energy and making vast quantities of domestic energy available. Unnecessary federal interference by EPA, the Interior Department, or other agencies will only stymie this success. In an environment of low oil prices, the federal government shouldn’t put U.S. producers at a disadvantage with duplicative regulations that make fracking more expensive.
Second, oil consumption isn’t going away anytime soon. As the middle class grows in countries like China and India, the demand for vehicles—and gasoline—will increase. One market research firm estimates that 2.1 billion light duty vehicles will be sold by 2035—the vast majority will run on petroleum. Now that they’re allowed to export oil, U.S. companies can help satisfy those growing markets.
This election year has gone beyond the candidates attacking each other; they’re going after business, too – and its trade deals, financial institutions and immigration stances.
The U.S. Chamber of Commerce is here to defend the American business community from this serious political and ideological assault. And we are asking you for your support – a vote for business. Why support business? Check out the facts.
With the right policy decisions, the next president can put us back on a path to growth, opportunity and prosperity. The stakes facing our next president – and the country – are too high for any of us to sit this one out.
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We continue to reap the benefits from fracking and the shale energy boom, a new report finds.
The United States’ energy security ranking moved up two spots in the latest International Energy Security Index published by the U.S. Chamber’s Institute for 21st Century Energy.
Norway claimed the top spot in the index, while the Ukraine is at the bottom.
There was overall improvement among the 25 largest energy consuming countries. This rests largely on reduced oil price volatility resulting from hydraulic fracturing and the U.S. shale energy boom.u-s-oil-production-2008-2015.png U.S. oil production: 2008-2015
In 2014 “global crude oil production surged nearly 1.6 million barrels per day (bbl/d).” Two-thirds of that came from increased U.S. output.
Karen Harbert, the institute’s president and CEO, sees the innovation behind the shale boom as a major driver for improved energy security in the years ahead:
U.S. energy producers are incredibly nimble, and through the use of advanced technologies, they are able to lower constantly the price point at which oil and natural gas can be produced profitably. If in increasing production the Saudi’s hope was to kill the U.S. shale industry, it has not worked. It is true that many companies find themselves in trouble and production is slipping, as is the number of rigs being deployed. The fact remains, however, that U.S. producers are so skillful at what they do that they will be able to ramp up production on short notice at the first indication of rising prices.
The lifting of the ban on crude oil exports also should result in greater U.S. participation in global oil and natural gas markets on the supply side to limit the use of energy as a geopolitical weapon and smoothing out volatility.
Another takeaway from the index is how industry is responding to energy prices and the deteriorating energy situation in Europe. Renewable energy mandates that lead to high energy prices in the U.K., Germany, and other European countries are pushing industrial production of steel, aluminum, chemicals, and other materials out of Europe and in some cases towards the United States which “pays two to four times less for natural gas, coal, and electricity than many of its global competitors.”
“Seven of the bottom ten countries among large users in our electricity risk Index metrics are in Western Europe, which is making industries like manufacturing and chemicals an endangered species there,” said Stephen Eule, vice president at the institute.
Yet instead of enhancing U.S. energy abundance and reinforcing the United States' competitive advantage, the Obama administration choses to embrace the anti-fossil fuel “Keep it in the ground” movement, Harbert writes:
The irony in all of this from the U.S. perspective is the attitude of the Obama Administration, which appears more than willing to relinquish America’s energy edge by raising energy prices on American consumers and industry. The president’s call for new taxes and regulations on oil and natural gas production, not to mention U.S. Environmental Protection Agency’s Clean Power Plan—which the Supreme Court wisely put on hold—would saddle consumers and businesses with significantly higher energy costs. America’s energy revolution has not only improved the nation’s energy security posture vis-à-vis other countries—we moved from a ranking of number six to number four in 2014— it has given U.S. business a critical leg up in today’s intensely competitive global economy.
The energy security index is derived from such metrics as fuel diversity, exposure to reliable energy sources, price volatility, energy use intensity, and energy efficiency. 2014 data, the latest available, is used to construct the index.
The Energy Institute has a web tool to visually understand the vast data collected in the index.
Top five countries in the 2016 International Energy Security Index:Norway Mexico New Zealand United States Denmark
Bottom five countries in the 2016 International Energy Security Index:Ukraine Thailand Brazil South Korea China
Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.