Peter Orszag Sells Out: Fracking Boom Could Finally Cap Myth of Peak Oil (former Obama OMB Director)

[stockholmer]

http://www.bloomberg.com/news/2012-02-01/fracking-boom-could-finally-cap-myth-of-peak-oil-peter-orszag.html

The U.S. oil market could be on the verge of its own fracking revolution, similar to what the natural-gas market is already experiencing. As a result, domestic production is now projected to rise significantly over the coming decades, reducing the relative share of imports in U.S. oil consumption.

Advances in horizontal drilling and hydrofracking, in which highly pressurized liquids are injected into underground rock, have been used increasingly over the past few years to extract natural gas. The result has been a substantial increase in recoverable reserves -- accompanied by a lot of controversy over fracking’s environmental effects -- and an associated decline in the cost of natural gas.

In late 2007, wellhead prices http://www.eia.gov/dnav/ng/hist/n9190us3m.htm for natural gas were hovering in the range of $6 to $7 per thousand cubic feet; by late 2011, they had declined to $3 to $4, and they have fallen further since. John Deutch, a former director of the Central Intelligence Agency, has written http://www.foreignaffairs.com/articles/67039/john-deutch/the-good-news-about-gas that, given the impact on energy markets and therefore geopolitical dynamics, “it is perhaps a permissible exaggeration to claim a natural-gas revolution.”

The same controversial technologies used to recover natural gas from deep-rock formations are now increasingly being used to extract oil. Oil is already being produced from shale at several locations throughout the U.S., most notably the Bakken shale in North Dakota. http://topics.bloomberg.com/north-dakota/ As Jim Mulva, the chief executive officer of ConocoPhillips, recently said, “The revolution has spread to domestic oil production. And it may track the path it followed with natural gas. We just don’t know yet. But it looks promising.”

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see The Oil Drum for a cold, hard look at this type of 'cornucopian' delusion

http://www.theoildrum.com/

also

Businessweek Gets it Wrong - Everything You Know about Peak Oil is NOT Wrong

http://www.aspousa.org/index.php/2012/02/businessweek-gets-it-wrong-everything-you-know-about-peak-oil-is-not-wrong/

[RC]

1. If we are not on the down side of Peak Oil, then

what is all this Fracking about?

[JDPriestly]

3. Precisely, RC. As soon as you start fracking shale, you are seeing the end of oil.

[asjr]

2. One way or another we are going to

dig this planet to death.

[nanabugg]

4. Reliance on foreign oil is at an decade low. Why is gasoline so high then?

No one seems to be asking the question.

[bhikkhu]

5. Because the cost of production is so high

...and because demand remains so high, in spite of the cost. There is no cheap supply in the pipeline and its only getting more difficult and expensive to maintain the rates of flow to market.

Its not so much that the question isn't asked, but that the answer is unwelcome. Yes, there is oil, but no, its not going to get cheaper.

[Spider Jerusalem]

6. There's a very simple answer to that

"reliance on foreign oil" is at a decade low because Americans are driving less; road miles per person peaked a few years ago. People are also buying more fuel efficient vehicles on average. And corn ethanol accounts for a significant percentage of fuel used in the US, due to laws mandating blending of ethanol with gasoline. Total US crude oil production is at about 5.5 million barrels per day; total US consumption is at about 18 million barrels per day. Imports are at about 10 million barrels a day, give or take; the difference is made up by "natural gas liquids" and ethanol. The US STILL imports over half of all its oil; oil prices are set on international markets. The price per barrel is hovering in a band between $110-120; that's mostly driven by demand from China and the recovery in the US economy.