US crude reserves increased in 2007…. or did they?

The US Department of Energy (DOE) Energy Information Administration (EIA) has released their 2007 report on U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves, and it contains a few whoppers. The EIA releases one of these every year, summarizing the state of US fossil fuel reserves and production. The numbers on production are pretty straightforward… oil and gas wells produce as much as they produce, it’s all counted up accurately when it goes to market. In contrast, the numbers on reserves – the amount of oil and gas still in the ground, and readily available for tapping – are much softer.

In their 2007 paper, the EIA report that US crude oil reserves went up 2%, not only replacing the oil pulled out of the ground in the last 12 months but adding some more to the grand total. If enough oil is discovered to match the amount produced, you call that a 100% increase in proved reserves additions. In 2007 the industry saw a 120% increase in proved reserves additions.

Except it didn’t. Although the numbers seem to suggest US oil supplies are just rolling in, the reality is not so rosy. In 2007 the total volume of oil in “new discoveries” under US land – I put it in quotes because everyone already knew the oil was there, they just didn’t tap it prior to 2007 – was 790 million barrels. That’s 28% less than the average amount of new oil brought to market within the US over the last decade, at 1,100 million barrels each year (averaged). In 2006 only 577 million barrels were “added” to the list of proven reserves. This “new” oil isn’t really new, keep in mind. No one was shocked to discover a new gusher anywhere. In this context, “new” oil is oil that finally became expensive enough to make it worth pulling up from below. It was already mapped, but still untapped.

How much oil counts as a “proven reserve” depends on how expensive the oil is at the marketplace. At over $100 a barrel, marginal oil that wasn’t worth the trouble before, suddenly is worth the trouble. The oil might be so deep that it costs more to sink a well that deeply, or it might be so thick it requires special technology to suck out of the ground, or it might contain too much sulfur (sour crude) that requires costly chemistry to remove before or during refinement. Economics determines what is “good” oil and what is “worthless” oil. When the price of a barrel rises to $200, or $500, all sorts of iffy dregs will become lucrative, and they’ll get added to the “proven reserves” list.

None of the “new” reserves are from fresh, untouched deposits. None are from National Park land. All of the “new” oil reported by the EIA was brought to market from existing, established fields; from difficult deposits that are now worth the trouble. The increase comes entirely from extensions to existing fields. That’s just how the petroleum market works. The problem comes in where people look at those numbers and say, “Oh, wow! The US has plenty of oil after all! Drill, baby, drill!” Not quite.

US petroleum production has been in decline since 1970, and it will never go up again. That doesn’t mean it’s not worth using what oil we have, it just means we can’t expect that more drilling will get the US to energy independence. Petroleum independence for the US is physically impossible, and not because of hippies keeping oil companies away from oceans of cheap oil under Yellowstone. We can’t drill our way to independence because petroleum is a physical, geologic substance, it is finite, and it is running low.

Here are some fun facts to toss around today at happy hour (all data from the EIA):

Total proved reserves of petroleum in the US, for 2007:

21,317 million barrels

Total production (pumped up and sold) of petroleum in the US, in 2007:

1,691 million barrels

Oil in new field discoveries and new discoveries in old fields, in the US in 2007:

139 million barrels

Consumption of petroleum in the US, in 2007:

20.6 million barrels per day

So, basically, the US uses enough oil in one week to match all of the new discoveries of oil under US land made during one year. Our total annual production of oil – everything we can bring to market from US territory in one year – could only supply the nation with oil for 82 days if we were suddenly cut off from the rest of the world. That’s with all the major oil companies in the US working day and night to pump and drill and refine every drop.

The US can either keep depending on foreign powers for our petroleum, in a world where everyone’s oil supplies have peaked and are now in permanent, slow decline, or we can start to think about where else to get our energy. We use a lot of oil, and we have very little of our own.

Now is it clear why “Drill, baby, drill!” is an idiot’s mantra?

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~ by Planetologist on October 17, 2008.

5 Responses to “US crude reserves increased in 2007…. or did they?”

  1. […] ain’t so great My recent post on petroleum madness attracted a very good segue comment leading to a discussion of nuclear power, so I decided to […]

  2. Well, I never claimed to be the sharpest billiard ball in the rack… oh wait…

    Actually I’m not anti-nuclear. I know that surprises my environmentalist friends (because I’m an environmentalist, too), but nuclear is a proven technology that provides a substantial energy product from a small package. In grad school I worked in a nuclear geochemistry lab, studying instrumental neutron activation analysis. I guess for that reason nuclear chemistry is very interesting to me, and through knowledge and familiarity I don’t fear it disproportionately. In fact if you take a look at my publication list, you’ll see a few uranium-research papers in there.

    That said, although I’m not against nuclear, I think we can’t depend on it as a primary global energy solution. It comes down to two issues with me: supply and efficiency.

    The supply of uranium is fairly stable, with nuclear fission being a minority energy player in a few nations today. I think we could use a bit more nuclear, but probably not too much more. Right now, only a handful of nations use a substantial amount of fission power in their energy mix. The demand for U is consistent, as a result. But if everyone in the world started using U for energy, or if the US went whole hog into a fission bender, I don’t think supply could meet demand for very long. There is probably enough ore U still in the ground to feed a minority nuclear share in world power for decades, maybe even a couple of centuries, but probably not much longer.

    U isn’t sustainable, and it’s pretty finite. Fission destroys U atoms, and even breeder reactors aren’t perpetual motion machines, they’re just techniques to extend the supply slightly. Unless we start mining the planet Mercury, nuclear doesn’t have much of a long term future as a support to human civilization.

    The other issue is efficiency… as in total cost including externalities, versus energy yield. Nuclear has a very high cost, including strip-mining, ore processing and enrichment, plant security, and most of all spent fuel storage. If you choose to reprocess, you get more bang per kg of U, but your costs soar, and you create plutonium – and every gram of Pu is conveniently bomb-ready, no isotopic enrichment required. Radioactive wastes are dangerous but manageable, yet any responsible management of such wastes is very expensive, for a long time. Factoring in all that, wind and solar become much more attractive from a cradle-to-grave utility/cost standpoint.

    And don’t even get me started on fusion… 😉

  3. You sounded intelligent until the last statement of your post. We still need to drill because our country will need to transition not stop cold turkey. The real pillar has to be nuclear, with wind, tides and solar providing increasing power when they become more proven. But as you know your people are really against those as well.

  4. Well, it’s more a case of what costs the least to use. Petroleum has been cheap until now, and although in Europe gasoline is taxed more heavily, with the aim of supporting the transportation infrastructure and other costs of cars, we don’t do that so much here. Expensive gas is a new experience to most Americans.

    It’s true that if we were totally dedicated to oil and only oil, we could keep going for a few more decades, depending on tar sands and oil shales, along with heavy oils. But those are all very expensive in external costs like CO2, strip-mining, air pollution, etc., not to mention the raw expenses of digging the crap up and processing it. Usually, though, it’s the gross economics that seem to matter most. If coal gasification or ethanol end up being cheaper, we’ll end up using those. If not, Canada will be pretty rich soon… it’s got the lion’s share of the world’s tar sands.

    I plan to blog more details on this with time. It’s pretty interesting, to live during what will end up being a major rollover in the way our civilization maintains itself, energy-wise. We’ll see it happen over the next few decades. I just hope we don’t let ourselves get too flatfooted by it.

  5. Wow. I guess as long as the price is right, we’ll never run out.

    “The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.”
    Sheik Ahmed Zaki Yamani

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