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"Peak" Oil?
The USGS Just Found 20 Billion Barrels of Oil

In what seems to becoming a weekly occurrence, the oil industry just produced another stunning example of its ability to find new reserves in the 21st century. A new assessment of the so-called “Wolfcamp shale” formation near Midland, Texas estimates that the region contains some 20 billion barrels of crude and another 1.6 billion barrels of natural gas liquids. Take that, “peak oil” doomsayers. The Texas Tribune reports:

[The Wolfcamp shale estimation is] three times higher than the amount of recoverable crude the agency found in the Bakken-Three Forks region in the upper midwest in 2013, making it “the largest estimated continuous oil accumulation that USGS has assessed in the United States to date,” according to a statement.

“The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” said Walter Guidroz, program coordinator for the USGS Energy Resources Program.

The fact that the USGS is now—in 2016—making its largest-ever estimate of a single oil resource speaks volumes about the state of American energy security, and the speed at which our country’s oil landscape has changed over the past decade as a result of the shale revolution. To be clear, without technological advances like hydraulic fracturing and horizontal well drilling—two practices that have only been deployed en masse over the past eight years or so—we wouldn’t be counting these 20 billion barrels of crude as recoverable.

While OPEC struggles to stay afloat in a market where crude struggles to break $50 per barrel, U.S. shale producers are surprising analysts and petrostates alike with their ability to keep the oil flowing at these bargain prices. This resiliency can largely be put down to their relentlessly innovative spirit and the dogged pursuit of technological advances to help streamline drilling processes and bring breakeven costs down. But new technologies aren’t just keeping shale firms afloat, they’re also uncovering new reserves of oil and gas that will continue to buoy America’s position as a major energy supplier for years to come.

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  • BrianFrankie

    I love reading the American Interest articles about the new era of energy production. Very insightful take.

    But as an industry veteran, there are a couple of small corrections I need to mention. I’m sympathetic – this is a complex technical subject, but repeating inaccuracies is not helpful in improving understanding, and therefore I’d encourage AI to strive to improve.

    First, you have made repeated references to “Peak Oil”. This is an amorphous phrase, and means many things to different people, but in a technical sense it is a reference to Hubbert’s Curve used for petroleum resource extraction. From a purely technical perspective, the bonanza of shale oil does not in any way disprove Hubbert’s Curve, or peak oil. This is because the theory was created and applied specifically to *conventional* oil. US conventional production peaked around 1970 and, as near as we can tell, worldwide conventional production peaked around 2010 – 2015. We have already passed peak oil. In fact, this was related to the high price environment in the 2011 – 2014 period.

    Technical experts who use the concept were always aware of the inevitability of peak oil, in the technical sense, as opposed to the popular literature, but there was little concern in the industry because there was knowledge that alternatives would replace conventional oil. Exactly what alternatives would be best was hard to see ahead of time – there were plenty of candidates, including heavy oil / oil sands, deepwater oil, gas to liquids, conventional natural gas, LNG, even biofuels, to name a few. But shale has proven to be the most economic, with the largest impact. Make no mistake, though, shale is a different technology from conventional oil production, just as conventional oil was an alternative technology that replaced whale oil, and nuclear fusion is an alternative technology to fission, and solar thermal is an alternative technology to solar PV. To lump shale oil in with conventional and say peak oil will not occur is making a category error. At least in a technical sense – the popular understanding of peak oil is closer to your usage. That is fine, as long as you make sure to differentiate.

    The second error is an omission. You have repeatedly noted that shale production is enabled by hydraulic fracturing and horizontal drilling. True as far as it goes, but the shale production revolution is a technological three legged stool. The third leg is the increasing power of seismic imaging, which is wrapped up in the IT revolution. Seismic technology has improved by leaps and bounds, in sensors, and data capacity and processing, and analytics, and now enables drillers to plan their wells within meters to zones that are well defined before the bit ever spuds. This is a game changer and has entirely redefined wildcatting. That’s right, shale oil is as much a product of the information revolution as any of the more familiar applications – Uber, or Amazon, for example. Just another example of the amazing synergies modern technology is throwing off all around us, that most people don’t even notice. Next time anyone complains about the information revolution only producing cat videos, and other meaningless trivia, remind them their car is filling up for $2 a gallon and see if you get a puzzled look…

    Best regards, and keep up the fine work
    Brian

    • Stanford Alum

      Interesting. I appreciate such technical corrections (though, as a political scientist, I’m in no position to evaluate your correction, but you certainly write very persuasively).

  • MiloMason

    “The USGS Just Found 20 Billion Barrels of Oil”
    –I now have two words for the Middle East Oil Sheiks who have been ripping us off for centuries: One of them is -OFF !!!!!!

  • Proud Skeptic

    “Born free! As free as the wind blows. As free as the grass grows….”

  • Kimmon Johnson

    I want to point out another inaccuracy in this article embodied in the headline itself.

    The United States Geological Survey does not “find” oil or natural gas. The hardworking, resourceful people in the private sector Oilpatch do that. The USGS comes along later to verify it publicly.

  • Gene

    Hallelujah … more cheap road trips for me!

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