World added new oil three times faster than oil was used from 2003 to 2013

According to calculations by Gilbert Masters, Stanford Professor of Civil and Environmental Engineering, Emeritus, current oil supplies in all nations combined would last the world for only about 41 years.

Gilbert Masters neglected to mention that this is based on the assumption that oil and gas firms stopped trying to find new oil and stopped trying to improve how they extract oil.

The world is using about 95 million barrels of oil per day which is about 35 billion barrels per year.

This was about the pace of oil usage since the 1990s but most years the new oil discovered replaced the oil that is used. But from 2003-2013 about 650 billion barrels of new oil was found (or we figured out how to extract it) beyond the 380 billion barrels that were used.

Apple corporation could burn through their 256 billion in cash reserves in 18 months … if Apple did not continue to make more revenue. Apple only has 18 months of cash left if they kept spending at the current rate and generated not a single dollar more in income. This is exactly the same type of scenario applied to oil with the Gilbert Masters “how long oil reserves will last” game.

With global demand expected to grow by 1.2 mb/d a year in the next five years, the IEA has repeatedly warned that an extended period of sharply lower oil investment could lead to a tightening in supplies. Exploration spending is expected to fall again in 2017 for the third year in a row to less than half 2014 levels, resulting in another year of low discoveries. The level of new sanctioned projects so far in 2017 remains depressed.

“Every new piece of evidence points to a two-speed oil market, with new activity at a historic low on the conventional side contrasted by remarkable growth in US shale production,” said Dr Fatih Birol, the IEA’s executive director. “The key question for the future of the oil market is for how long can a surge in US shale supplies make up for the slow pace of growth elsewhere in the oil sector.”

The US shale industry has lowered its costs to such an extent that in many cases it is now more competitive than conventional projects. The average break-even price in the Permian basin in Texas, for example, is now at USD 40-45/bbl. Liquids production from US shale plays is expected to expand by 2.3 mb/d by 2022 at current prices, and expand even more if prices rise further.

US has well over 7 trillion barrels of oil in place

Oil in place in the continental US is from about 3 trillion to 5 trillion barrels of oil not including the 4.5 trillion barrels of oil shale.

1.53 trillion barrels Piceance Basin of Colorado (USGS, June 2011 oil shale)
1.44 trillion barrels Green River formation (USGS, June 2011 oil shale)
1.32 trillion barrels for the Uinta Basin of Utah and Colorado. (USGS, June 2011 oil shale)
260-500 billion barrels Monterey Formation (tight oil)
271-503 billion barrels Bakken Formation (tight oil)

Aggressive use of new fracking technology and combined with fire flooding and water flooding could enable 20-30% recovery rates. Large amounts of the Oil shale is likely recoverable with fire flooding. So 6.5 trillion to 9.5 trillion barrels of oil, with 20-30% recovery rates is 1.3 to 2.8 trillion barrels of oil. Oil Shale like in the Green River Formation cannot be recovered with horizontal drilling. It will require fire flooding or some other likely insitu method.

USGS Assessment of In-Place Oil Shale Resources of the Green River Formation, Greater Green River Basin in Wyoming, Colorado, and Utah

The three units of the Green River Formation assessed here, in ascending order, are the Tipton Shale Member, the Wilkins Peak Member, and the LaClede Bed of the Laney Member (fig. 2). Note that the boundaries of the assessment units, particularly those for LaClede Bed and Wilkins Peak assessment units vary stratigraphically across the basin. Total in-place resources are estimated at 1.44 trillion barrels of oil divided among the three assessed units as follows: (1) Tipton Shale Member, 362,816 million barrels of oil (MMBO); (2) Wilkins Peak Member, 704,991 MMBO; and (3) LaClede Bed of the Laney Member, 377,184 MMBO.

This result compares with in-place resource estimates of 1.53 trillion barrels for the Piceance Basin of Colorado and of 1.32 trillion barrels for the Uinta Basin of Utah and Colorado.

Oil and Shale formation website.

North Dakota’s Bakken has estimates of 271 and 503 billion barrels of oil with an average of 413 billion barrels of oil. This does not include other oil formations in North Dakota like Spearfish and others.

California’s Monterey Formation has estimates from 260 billion barrels of oil in place to 500 billion barrels

The Permian Basin in Texas could have 65 billion barrels of oil left

Texas Eagle Ford formation has tens of billions of barrels of oil in place.

The Green River oil formation has 1.2 to 1.8 trillion barrels of oil in place

The Department of Petroleum has an estimate that America’s total oil shale resources could exceed
6 trillion barrels of oil equivalent.
Previously there was the belief that the the formations that were too thin (like the Bakken, Eagle Ford and Monterey) could not be developed but those are now rapidly heading to 1 million barrels of oil per day for the Bakken, 420,000 barrels of oil per day for Eagle Ford.

The US could be able to produce at least 150 billion barrels of oil (5% of oil in place) to maybe 1.0 trillion barrels (20% of oil in place) of oil if the majority of these plays can be water flooded and CO2 injected as in the Canadian Bakken.

* 5% for the low estimate of 3 trillion barrels is 150 billion barrels
* 20% of the high estimate 5 trillion barrels figuring they could do some water flood and CO2 tertiary treatment to a large part of this land.

For this oil to be recovered, it will require that the oil price stays above $70 a barrel so the economics are in place to fully develop these areas.

Going all in on the “Drill baby drill” approach and using fire flooding, water flooding and other types of drilling innovation will drive down the cost of oil recovery while increasing the speed and expanding the amount of oil that is recoverable.