In 1956, geologist M. King Hubbert presented a paper to the American Petroleum Institute in which he warned that new reserve discoveries failed to keep up with the rate of fossil fuel consumption. Hubbert accurately predicted the domestic production peak of the 1970s, making him synonymous with the term “peak oil.” However, he failed to foresee the ingenuity of the free-enterprise system and how the U.S. would become an energy powerhouse in the 21st century.
…this reserve alone could meet the nation’s energy needs for decades.
The Department of the Interior (DOI) recently announced that it has discovered recoverable oil and gas reserves in the Delaware Basin that lies between New Mexico and West Texas. According to the federal government, two underground layers contain 46.3 billion barrels of unrecovered oil, as well as 281 trillion cubic feet of natural gas.
The U.S. Geological Survey (USGS) revealed that this is the largest oil and gas reserve it has ever come across. But analysts say that the tally might be underestimated. Because scientists only examined two layers of the hydrocarbon-filled shale rock zones, the final numbers may be much larger than those in the report.
As a result, this is now one of the most important places on the planet for crude production, says Ryan Flynn, the New Mexico Oil and Gas Association Executive Director. He projects that this reserve alone could meet the nation’s energy needs for decades.
“We really have an unprecedented opportunity thanks to strength of the oil and gas industry and this surplus, which again, I think today’s announcement means this surplus can be the norm rather than the exception. We have an opportunity to hire more teachers, provide healthcare for more New Mexicans, to increase and make our communities safer.”
This also raises another fascinating question: Just how many hidden oil and gas reserves are there in the U.S.?
US Energy Powerhouse
In the 1970s, American motorists endured an oil crisis. Such a scenario would be hard to envision these days, but there was a time when cars would form lines extending several blocks to purchase a few gallons of expensive gasoline because of Middle East hostilities. It would be inconceivable today because America is now an energy juggernaut, thanks to the shale-oil revolution.
Over the last decade, companies invested in hydraulic fracturing, otherwise known as fracking, to extract petroleum or natural gas from deep in the Earth. This process involves opening and widening the cracks below the planet’s surface by inserting chemicals, sand, and water at high pressures.
This method has fueled U.S. output, producing 11 million barrels per day (bpd) and topping the 1970 peak of 10.044 million bpd. With immense reserves still being stumbled upon, you cannot help but deduce that this figure could climb to 12 million bpd within the next couple of years.
Many analysts are frightened that domestic production could crater because prices are in a bear market, hovering just above $50 a barrel. Is there cause for concern? U.S. firms can profit from a barrel of oil costing $35, even with President Donald Trump’s tariffs on steel – cheap steel has facilitated the industry’s resurgence. It is the foreign businesses that cannot sustain their practices with contracts under $50. That said, the bottom may have yet to happen amid the ballooning global supply glut, especially as OPEC refrains from slashing output levels. But the U.S. can likely weather the storm.
And it isn’t only crude oil in which the U.S. is dominating – it’s natural gas, too. As the country transitions away from coal and into other energy sources, the U.S. has become a global leader in natural gas. This year, dry natural gas production has averaged 83.2 billion cubic feet per day (bcf/d), up 8.5 bcf/d from 2017. With prices trading at $5, output will only surge to keep up with the demand.
A Crude Renaissance
America’s rise from energy dependent to energy independent is a celebratory tale of the free-enterprise system and how so many of the so-called experts got it wrong. Despite years of empty promises from every Republican and Democratic administration, the nation has finally morphed into an energy superpower, toppling the crude kings of Russia and Saudi Arabia. And the dominance persists.
For decades, there were two certainties. The first was that the U.S. relied on corrupt foreign governments to power the nation, continually fearing that any disagreements with these regimes would send imports plunging and prices skyrocketing. The second was the parade of experts going on television and warning about peak oil and the pending apocalypse.
Thanks to the transformation of the U.S. into Saudi America, bringing OPEC to its knees, those two inevitabilities of yesterday have been tossed into one of the many vast oil reserves in Texas or North Dakota. There is a renaissance occurring in the country’s energy sector, so let’s toast the drillers with a glass of Bubblin’ Crude and swim in the ocean of black gold.