An article on oil recently appeared in my Santa Barbara, California newspaper in March 2011 begging the question – “Can the U.S. Become Oil Energy Independent”? This question prompted me to compile my thoughts on this very critical question.
This article is by C. Paul Davis# (April 2011)
The simple and accurate answer to the question is a simple NO – the US. can’t become oil energy independent – no matter how much and where we drill. Some of the reasons why I believe this to be true are presented below.
Over the past 150 years oil has remained the world’s single most important source of energy – providing about 40% of the world’s energy--followed by coal at 26%, natural gas at 22%, hydro/nuclear at 10%, with wind and solar at just a few percent. Oil is also the lowest cost source of high density energy – oil energy has always been considered “cheap” until just recently. In the U.S., about 70% of all oil consumed is used to produce transportation fuels (gasoline, jet fuel, diesel, kerosene, etc.). One could easily say that the world, including the United States is literally “hooked” on oil.
The industrial revolution and the automobile are just two of the results of the availability of low cost oil energy. It is interesting to note that in 1938 the King of Saudi Arabia offered to sell all of his oil mineral rights for $5 million. Today, the oil industry is the largest industry in the world - $3 to $4 trillion per year depending on the price of a barrel of oil. We saw the price of oil spike at $147 in July 2008 then plummeting to $40-$50 in January 2009, and now ramping up to over $100. We have all personally experienced the effect this has had on the price of a gallon of gasoline, recently reported to be $3.88 per gallon by the Lundberg Survey.
Some facts about oil
The United States uses about 20 to 21 million barrels of oil per day, or 7 billion barrels per year and its needs have increased until just recently at a rate of about 1.5% per year. However, the United States produced and average of only 5.5 million barrels of oil per day in 2010 (US EIA). The other 16 million barrels must be imported from oil producing countries such as, Canada, Mexico, Saudi Arabia, Russia, Venezuela, Nigeria, and a few others. Canada is currently largest single source of imported crude oil for the United States.
Out of the 209 countries of the world only 112 produce oil; Saudi Arabia the largest producer of oil produces about 9 to 10 million barrels of oil per day.
At one time (1920s - 1940s), the United States was the world’s largest oil producer. With demand for oil growing, except for today’s “temporary pause” due to the 2008 world financial crisis there is another serious issue that must be addressed – globally about 80% of all oil fields are experiencing serious production declines of 6% to 9% per year. In fact, Mexico supplies the United States with about 16% of its oil imports representing about 78% of Mexico’s total oil exports. Mexico is currently experiencing a 16% production decline on its Cantarell Oil Field, formerly the third largest oil field in the world, but this is no longer the case. Very soon, Mexico will soon need all of its oil to meet its own domestic needs.
The United States, with less than five percent of the world’s population, uses about 25% of the world’s 85 million barrels of oil produced each day, or 31 billion barrels per year. This causes some countries (like China with 1.6 billion people and India with 1.1 billion people) to envy, if not dislike us very much because they use only a fraction of what we use per capita. However, big changes are underway in both of these countries--as well as many others-- and we can be sure that they will endeavor to find a way to achieve a larger share of the world’s oil, so that their people can also enjoy the same type of life style we have in the Western part of the world. Global oil wars in the future are a very real possibility unless replacements for oil can be found or invented.
Recently due to the global financial crisis many countries are temporarily using less oil because people are driving less. In 2010, drivers in the United States alone drove about nine billion fewer miles resulting in a reduction of one million barrels of oil used per day. The same for 2011. People are also spending less on just about everything as a result of the 2008 financial crisis. This reduction also impacts fuel consumed in the manufacturing sector. However, the recovery that is slowly happening, at least until now, will result in an ever increasing demand for more oil and higher prices for oil, gasoline, and many consumer products we use daily that need oil to produce them.
Often overlooked is the fact that oil is used to produce over 300,000 consumer products that all of us tend to take for granted—yet we count on them each day of our lives – things such as plastics, medicines, fertilizer, fabrics, inks, asphalt, tires, and the like.
There continues to be a lot of talk about drilling off shore again in the Gulf of Mexico in order to find some oil that is badly needed. There is no question that in time and with a great amount of capital investment, some additional oil fields can and will be found at tremendous depths and in harsh environments and at considerable cost with lots of attendant jeopardy. The critical problem is that not enough oil will ultimately be found to meet our needs or the world’s growing need for more affordable oil. With the depleting oil production that we are experiencing in the United States today, there is one indisputable fact - the United States will be even more dependent on foreign oil imports in the years ahead. United States is unlikely to ever be independent of foreign oil.
Certainly, the current push in the United States into crude production from oil-rich shales is an important development that could well spill over into other countries but the overall impact is still not known. With more than 25 such basins in North America, this is a potentially exciting potential. However, the economics of such sources are still tenuous with average recoveries on a per well basis still being relatively low with an associated rapid decline in production.
There is also an issue of potentially declining production from those countries that export crude oil to the United States. The late Matthew Simmons, a highly respected oil expert predicted in his book, “Twilight in the Desert” that most of Saudi Arabia’s giant oil fields, including the Ghawar field (the world’s largest oil field which has been producing about five million barrels of oil per day for more than 50 years) is now or will soon experience the same fate as Mexico’s Cantarell Field with its annual declining oil production.
All of this simply means that the United States will always be dependent on other oil producing countries to provide enough oil to meet its current and growing needs. This will be true unless and until the U.S. embarks on true alternatives to oil. However, despite our best efforts to date, such alternatives are not yet on the horizon—certainly not on the foreseeable horizon. T. Boone Pickens, a multi-billionaire who made his fortune in oil who has embarked on an aggressive plan to generate electricity using wind turbines will only produce less than five per cent of our total electricity needs, even if it proves highly successful in the next decade. In addition, his plan to convert from conventional gasoline to natural gas to fuel our cars will also probably meet the same fate. Even with some promising new technologies, it is unlikely that natural gas will replace gasoline and diesel any time soon. This is not to say that such technologies should not be pursued.
So, where does that leave the United States and all of us who live in cities like mine?
To solve the oil energy challenge that will dramatically impact the near future of our great country, our government and major companies (including our nation’s oil companies) must take bold and immediate steps before it is too late. Some of these include:
First, we must collectively recognize that there is a serious long-term oil energy problem facing our country (and the world) today.
Second, we must make finding or inventing meaningful new renewable and affordable technologies to replace oil a top priority. This will take many decades to achieve even if we start today.
Third, we must create the economic framework to allow our business and entrepreneurial communities to fund the effort with the multi-billions of dollars to develop energy alternatives. This point is currently being missed.
Fourth, the United States should provide proper recognition (i.e., an equivalent of the Nobel Prize) for people who create viable, commercial, and affordable alternative energy.
Lastly, everyone must be prepared to wait a minimum of 10 to 20 years for any new innovative technologies to evolve that will replace oil energy. Simply stated - there are no quick fixes.
What do we do in the mean time?
As a bridge to our energy future, it would seem that more time, effort, and money must be invested in improving current enhanced oil recovery (EOR) technologies. Today there are an estimated 6.2 trillion barrels of oil trapped in existing global oil fields. If only 10% of this trapped oil could be recovered it would provide an additional 620 billion barrels of oil or enough oil for another 20 years (the time we need) at the current global annual consumption rate of 31 billion barrels of oil. In the United States, there are an estimated 600 billion barrels of oil trapped in existing oil fields. At a 10% recovery rate, this translates into an additional 60 billion barrels, or just under nine years of supply at the U.S.’s current consumption rate of 7 billion barrels per year. Proven EOR technologies truly provide logical “Bridges to the Future.” EOR technologies that include CO2, thermal, surfactants, steam, and organic oil recovery have the beneficial aspect that they “Find new oil where old oil has already been produced” – i.e., in 70,000 existing global oil fields. The environmental impact and costs of such technologies are typically far less than other alternatives such as tar sands and true shale oil. Each of these technologies has a significant role to play.
Finally, we will never be able to drill ourselves out of this growing oil energy dilemma. “Drill Baby Drill” is strictly for politicians’ benefit, so that they have something to say to their constituents hoping to be re-elected.
Titan Oil Recovery, Inc., a company in the EOR industry, offers a new, proprietary, and proven technology called The Titan Process™ that is a type of Microbial Enhanced Oil Recovery (MEOR.) technology. Titan refers to its new revolutionary technology as Organic Oil Recovery (OOR) that uses organic microbes living in oil reservoirs to recover significant amounts of the needed trapped oil.
There is no quick fix to the world’s current oil energy crisis. Many knowledgeable industry experts believe that the world’s number one priority for the 21st Century is oil energy. Nothing else even comes close. I totally agree. The time to start addressing this serious challenge is today. Tomorrow might be too late.
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#C. Paul Davis is Senior Vice President of Titan Oil Recovery, a leading oil recovery company that uses field-proven biochemistry and microbiology to achieve additional oil production from existing oil fields.
