Oil, Gas, Debts and Jobs
By Paul Sullivan,
Georgetown University
As I stated in last week’s column there is an energy way out of some of the debt and deficit difficulties of the United States. The idea proposed could also be applied to Mongolia and many other resource rich countries.
There many ways of defining reserves of an energy resource. What you normally read about in newspapers is the proved reserves. These are the reserves that are commercially available with the technology and prices for the resource that exist at the moment. Just below the proved reserves are probable reserves. Those are the reserves known to be there at a very good probability and could be heading to be proved reserves if technologies and prices develop in the right ways. Below probable reserves are possible reserves. These are less well known and are likely in more expensive areas to get the oil or gas out. Possible reserves could also head towards being probable and then proved reserves. Below all of these are contingent reserves and prospective resources. The chances of contingent reserves and prospective resources becoming proved reserves seem remote at the time of discovery and initial analysis, but even these could someday head up to possible, probable and then proved reserves if technologies and prices head in the right way.
It is not as if you find reserves and immediately get them out and use them. This takes time and quite a lot of investment. It may take 8 years, or many more depending on what the development of local infrastructure etc. are like, from first discovery of oil and gas to getting it out to the market. The first steps are to identify the field through geological and other studies. If things are looking good then exploration wells are drilled. If these wells who promise then appraisal wells are drilled. If all is still going well than the field is developed, the gas and oil extracted and the money is on its way. As a well gets older its production needs to be extended by enhanced oil and gas recovery methods that include injections of fluids and other matter to increase the pressure in the well and so forth.
Most people when they think of oil they likely think of Saudi Arabia and the Gulf area, or Russia. When they think of natural gas, they may think of Russia, Qatar, and maybe about Iran, although that is another article altogether.
They really should be thinking more about the United States. We have massive resources of oil and gas. Our proved reserves are growing very quickly. The rest of the levels of our reserves and resources estimates are also growing. We have gigantic resources of shale gas, tight gas, shale oil, oil shale, oil sands, and even this stuff called methane hydrates (essentially frozen ices of methane, natural gas).
Shale gas is natural gas trapped in shale deep underground. Shale oil is oil trapped in shale deep underground. Both can now be extracted with not exactly new, but more perfected technologies that make it economically feasible. They both use fracking. This is when the field is drilled very deep into the ground and well below water tables vertically—sometimes for miles underground. Then the well is drilled horizontally for another couple of miles or so. After that the extraction pipe pumps cement to close off the entire pathway for the gas or oil to come up to the surface, except at the end where they oil goes into the pipe. Another pipe with explosive devices is sent down. The shale is cracked with controlled explosions to help extract the gas or oil. Then as this pipe comes up a new one is put down with fracking fluid. This fluid is mostly sand and water with a tiny percentage of other chemicals. This fluid is then pushed into the cracked shale to help get the oil and gas out. It is either left deep in the ground or brought to the surface with the oil and gas and recycled or stored in safe areas. This is when it is done properly.
It is important that safe and environmentally sound techniques are used, and proper regulations are imposed, to make sure this massive resource is developed in a sound manner.
The US oil shale is also gigantic. To get this “oil”, and it is actually a near-oil called kerogen, the shale can be dug up from the ground and heated to extract the kerogen. Another way is sending steam down to the shale or otherwise heating for long periods of time to have it separate from the shale rocks. Then the oil is extracted by pumping it up or by sending water down to pressure it up.
Oil sands can be extracted by digging it up. Oil sands are essentially sands covered with bitumen, another near oil, but closer to real crude than kerogen. It can also be extracted by something called SAGD, steam assisted gravity drainage, which does not entail damaging the lands above. SAGD seems to be the technology of the future and the dig and boil methods seems to be on the way out.
The SAGD for oil sands and the heating of oil shale often occurs very deep into the ground and it must be well below water tables and cannot encroach on them for this to be done properly.
The oil shale and oil sands need further processing before it can be used in the typical oil refinery. That entails extra costs and extra production of greenhouse gases, but a lot less of a percentage over normal oil production than some are saying.
With these new technologies and new discovery and production methods the United States now might be looking at a huge boom for many years to come in the production of natural gas and oil.
These new oil and gas resources have costs associated with them. This seems to be the focus of many groups. These groups also often magnify the costs way beyond what is reasonable. So we need to keep that in mind.
These new resources of oil and gas could also help the US reduce its oil imports. These often cost the equivalent of 1/3rd to ½ of our trade deficit. These new resources are also a huge source of income and wealth that could be taxed to help pay off our national debts, and even some personal and business debts for those working in the industry. Business and household debt in the U.S. is each about 80 percent of our GDP. So those debts are in the trillions. The federal debt is about 16 trillion. State debts could also be paid off in part with their revenues from oil and gas. Many states are near bankrupt after the recent financial and housing crisis.
Many jobs could be created in oil and gas. They already are being created in a very big way in places like North Dakota, where the Bakken shale oil is found, and in Texas, where the Eagle Ford shale oil and the Barnett and other shale gas fields are found. The turning around of many state’s economies could happen with the development of these resources. Unlike conventional oil these unconventional resources are spread across a larger part of the country’s geography. It is not just California, Texas and Alaska that are the biggest players. North Dakota, unheard of as an oil producer just 7 years ago, recently bypassed California as the third largest producer of oil in the country.
There may be tens to hundreds of billions of barrels of oil of reserves developed over the next few decades in the United States. There could be hundreds of trillions of cubic feet of natural gas reserves developed over the next few decades as well.
With the right investments, with the right technological developments, and with the right regulations and tax policies at the state, local and federal levels the United States could become a center of oil and gas production in the world. U.S. imports of oil could drop to tiny amounts. We might still likely rely much on oil sands from Canada for some time.
The tax revenues that could be developed from all of this could pay off much of our government debts. They could pay for improved roads, schools, bridges and more. This could help turn the U.S. into a new economy. It could be a boost toward faster growth and development. It could be a massive jobs producer.
If anyone in Mongolia is thinking this sounds familiar, indeed it should be. Mongolia has massive coal and other resources reserves. With the right policies, technologies and with the right uses of the revenues from its resources Mongolia could create a new economy, produce jobs, and make it people better off.
Resources can change the lives of people if they are developed and used properly.
Short URL: http://ubpost.mongolnews.mn/?p=1435
Georgetown University
As I stated in last week’s column there is an energy way out of some of the debt and deficit difficulties of the United States. The idea proposed could also be applied to Mongolia and many other resource rich countries.
There many ways of defining reserves of an energy resource. What you normally read about in newspapers is the proved reserves. These are the reserves that are commercially available with the technology and prices for the resource that exist at the moment. Just below the proved reserves are probable reserves. Those are the reserves known to be there at a very good probability and could be heading to be proved reserves if technologies and prices develop in the right ways. Below probable reserves are possible reserves. These are less well known and are likely in more expensive areas to get the oil or gas out. Possible reserves could also head towards being probable and then proved reserves. Below all of these are contingent reserves and prospective resources. The chances of contingent reserves and prospective resources becoming proved reserves seem remote at the time of discovery and initial analysis, but even these could someday head up to possible, probable and then proved reserves if technologies and prices head in the right way.
It is not as if you find reserves and immediately get them out and use them. This takes time and quite a lot of investment. It may take 8 years, or many more depending on what the development of local infrastructure etc. are like, from first discovery of oil and gas to getting it out to the market. The first steps are to identify the field through geological and other studies. If things are looking good then exploration wells are drilled. If these wells who promise then appraisal wells are drilled. If all is still going well than the field is developed, the gas and oil extracted and the money is on its way. As a well gets older its production needs to be extended by enhanced oil and gas recovery methods that include injections of fluids and other matter to increase the pressure in the well and so forth.
Most people when they think of oil they likely think of Saudi Arabia and the Gulf area, or Russia. When they think of natural gas, they may think of Russia, Qatar, and maybe about Iran, although that is another article altogether.
They really should be thinking more about the United States. We have massive resources of oil and gas. Our proved reserves are growing very quickly. The rest of the levels of our reserves and resources estimates are also growing. We have gigantic resources of shale gas, tight gas, shale oil, oil shale, oil sands, and even this stuff called methane hydrates (essentially frozen ices of methane, natural gas).
Shale gas is natural gas trapped in shale deep underground. Shale oil is oil trapped in shale deep underground. Both can now be extracted with not exactly new, but more perfected technologies that make it economically feasible. They both use fracking. This is when the field is drilled very deep into the ground and well below water tables vertically—sometimes for miles underground. Then the well is drilled horizontally for another couple of miles or so. After that the extraction pipe pumps cement to close off the entire pathway for the gas or oil to come up to the surface, except at the end where they oil goes into the pipe. Another pipe with explosive devices is sent down. The shale is cracked with controlled explosions to help extract the gas or oil. Then as this pipe comes up a new one is put down with fracking fluid. This fluid is mostly sand and water with a tiny percentage of other chemicals. This fluid is then pushed into the cracked shale to help get the oil and gas out. It is either left deep in the ground or brought to the surface with the oil and gas and recycled or stored in safe areas. This is when it is done properly.
It is important that safe and environmentally sound techniques are used, and proper regulations are imposed, to make sure this massive resource is developed in a sound manner.
The US oil shale is also gigantic. To get this “oil”, and it is actually a near-oil called kerogen, the shale can be dug up from the ground and heated to extract the kerogen. Another way is sending steam down to the shale or otherwise heating for long periods of time to have it separate from the shale rocks. Then the oil is extracted by pumping it up or by sending water down to pressure it up.
Oil sands can be extracted by digging it up. Oil sands are essentially sands covered with bitumen, another near oil, but closer to real crude than kerogen. It can also be extracted by something called SAGD, steam assisted gravity drainage, which does not entail damaging the lands above. SAGD seems to be the technology of the future and the dig and boil methods seems to be on the way out.
The SAGD for oil sands and the heating of oil shale often occurs very deep into the ground and it must be well below water tables and cannot encroach on them for this to be done properly.
The oil shale and oil sands need further processing before it can be used in the typical oil refinery. That entails extra costs and extra production of greenhouse gases, but a lot less of a percentage over normal oil production than some are saying.
With these new technologies and new discovery and production methods the United States now might be looking at a huge boom for many years to come in the production of natural gas and oil.
These new oil and gas resources have costs associated with them. This seems to be the focus of many groups. These groups also often magnify the costs way beyond what is reasonable. So we need to keep that in mind.
These new resources of oil and gas could also help the US reduce its oil imports. These often cost the equivalent of 1/3rd to ½ of our trade deficit. These new resources are also a huge source of income and wealth that could be taxed to help pay off our national debts, and even some personal and business debts for those working in the industry. Business and household debt in the U.S. is each about 80 percent of our GDP. So those debts are in the trillions. The federal debt is about 16 trillion. State debts could also be paid off in part with their revenues from oil and gas. Many states are near bankrupt after the recent financial and housing crisis.
Many jobs could be created in oil and gas. They already are being created in a very big way in places like North Dakota, where the Bakken shale oil is found, and in Texas, where the Eagle Ford shale oil and the Barnett and other shale gas fields are found. The turning around of many state’s economies could happen with the development of these resources. Unlike conventional oil these unconventional resources are spread across a larger part of the country’s geography. It is not just California, Texas and Alaska that are the biggest players. North Dakota, unheard of as an oil producer just 7 years ago, recently bypassed California as the third largest producer of oil in the country.
There may be tens to hundreds of billions of barrels of oil of reserves developed over the next few decades in the United States. There could be hundreds of trillions of cubic feet of natural gas reserves developed over the next few decades as well.
With the right investments, with the right technological developments, and with the right regulations and tax policies at the state, local and federal levels the United States could become a center of oil and gas production in the world. U.S. imports of oil could drop to tiny amounts. We might still likely rely much on oil sands from Canada for some time.
The tax revenues that could be developed from all of this could pay off much of our government debts. They could pay for improved roads, schools, bridges and more. This could help turn the U.S. into a new economy. It could be a boost toward faster growth and development. It could be a massive jobs producer.
If anyone in Mongolia is thinking this sounds familiar, indeed it should be. Mongolia has massive coal and other resources reserves. With the right policies, technologies and with the right uses of the revenues from its resources Mongolia could create a new economy, produce jobs, and make it people better off.
Resources can change the lives of people if they are developed and used properly.
Short URL: http://ubpost.mongolnews.mn/?p=1435
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