The American Petroleum Institute reports that the United States produced more crude oil in October than it has ever produced in a single month, "peak oil" or not.
This reversal of trend helps explain why U.S. domestic production for the year will be 140,000 barrels a day higher than last year (which was 410,000 barrels a day higher than 2008). Although the U.S. Energy Information Administration (EIA) says U.S. production will decline next year, who knows?
Could these numbers reflect the beginning of the end for U.S. dependence on Mideast oil? Well, in fact, they could be. As Forbes magazine publisher Steve Forbes optimistically asserted the other day, the whole world is "awash in energy."
Mr. Forbes isn't the only one to notice. As an article last month in The New York Times observed: "Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation." Further still: "Another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia."
Mr. Forbes was explaining why CNOOC, China's principal state-owned oil company, was paying Chesapeake Energy $1.08-billion (U.S.) in cash for a one-third interest in the company's next shale gas play in Texas - and paying 75 per cent of the cost of developing it.
Yes, China was investing in drilling technology: China itself has abundant shale gas reserves. But China had another objective. "Within a decade," Mr. Forbes said, "the U.S. will be a major natural gas exporter." And China will be a major importer.
The two countries signed an accord ( the U.S.-China Shale Gas Resource Initiative) last year to reflect this coming U.S. energy reversal. "The United States," the accord notes, "is a world leader in shale gas technology." The accord commits the U.S. to deliver this technology to China - and, by implication, requires China to open further its oil and gas industry to Western companies.
With rising production from shale fields, the U.S. surpassed Russia last year to become the world's largest supplier of natural gas. Shale now accounts for 10 per cent of the country's natural gas production - up from 2 per cent in 1990. Chesapeake's production from its next Texas project, expected by the end of 2012, will by itself supply the energy equivalent of 500,000 barrels of oil a day.
For new oil, the U.S. has the huge Green River play that overlaps Colorado and Utah, one of the largest shale oil fields in the world. The EIA reports that the country's proven reserves of crude rose last year by 9 per cent to 22.3 billion barrels.
For natural gas, the U.S. has the four largest fields in the world: the Haynesville field in Louisiana (with production up by 77 per cent in 2009); the Fayetteville field in Arkansas and the Marcellus field in Pennsylvania (both with production up by 50 per cent); and the Barnett field in Texas and Oklahoma (with production up by double-digit increases). The EIA reports that proven U.S. reserves of natural gas increased last year by 11 per cent to 284 trillion cubic feet - the highest level since 1971.
Beyond shale oil and shale gas, there's the awesome energy promise of methane hydrates, frozen crystals of water and gas that lie beneath the northern permafrost and beneath oceans floors around the world in quantities that boggle the imagination.
"Assuming 1 per cent recovery," the U.S. Geological Survey says, "these deposits [in U.S. territory]could meet the natural gas needs of the country (at current rates of consumption) for 100 years."
The UN Environment Program describes methane hydrates as "the most abundant form of organic carbon on Earth." The agency says field testing, in which Canada has been a leader, will be finished by 2015; and that commercial exploitation will be under way by 2020 or 2025. Within a decade or so, North America will almost certainly emerge as the world's biggest supplier - and exporter - of reasonably cheap energy.
Correction: U.S. domestic crude oil production reached 5.5 million barrels a day in October, half the production of the U.S. "peak oil" high in 1970. Incorrect information was published in this online and in the print versions of this column.Report Typo/Error
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