Letter: Shale boom is improving US economy, reducing its dependency
The U.S. oil and natural gas industry is undergoing a rapid transformation. Just a few years ago the idea of America using supertankers to export oil around the world would have seemed preposterous. Remember all the hand-wringing over U.S. dependence on Middle East oil?
Now, thanks to dramatic breakthroughs in shale technology, U.S. oil production is on track to reach historic highs, more than 12 million barrels a day by 2019, rivaling that of Saudi Arabia and Russia.
And exports have risen so fast that America ships out more petroleum to Asia and Europe than most of OPEC’s member nations, something that would have been absolutely inconceivable a decade ago.
Even more astonishing, the Permian Basin’s oil reserves, underlying a large swatch of Texas and New Mexico, exceed oil resources in all of Saudi Arabia. Entrepreneur Steve Forbes expects something even more remarkable to happen: In the next decade or so, the U.S. will be the world’s lowest-cost producer of oil and gas. Think about it: the U.S. will be able to produce oil and gas cheaper than Saudi Arabia.
Due to technological breakthroughs such as advances in hydraulic fracturing and horizontal drilling, combined with choosing “sweet spots” and better locations to drill, the cost of producing shale oil and natural gas has plummeted in recent years. What’s more, every credible forecast sees shale production rising, so much so that Appalachia is expected to produce 37 percent of the nation’s natural gas by 2040 – and, along with it, a large number of new petrochemical plants and manufacturing facilities.
In the case of Pennsylvania, it’s not hard to figure out the reason for this dazzling performance: It has been made possible by government policies that hold down taxes. That conviction, driven by common-sense energy policies and tens of billions of private investments, have turned the Marcellus and Utica shales into prolific producers of natural gas, lifting the state’s economy, improving air quality, providing substantial savings for consumers, and creating thousands of jobs.
What’s important to recognize is that geophysicists say we’ve only scratched the surface of innovations yet to come. The future of oil and gas production is about a digital and artificial intelligence revolution. The effect will be to save costs and improve drilling performance through the use of robots and drones.
And this is likely to have a much bigger impact on the reduction in greenhouse-gas emissions than the deployment of renewables.
Large energy companies such as ExxonMobil and Chevron have been redirecting funds from offshore drilling to shale operations. The thinking is that if technology can improve faster than shale-quality diminishes, producers can keep growing production and even lower the cost of extracting oil and gas. The effect of that will be to offset Russia’s attempts to meddle with U.S. energy production and give the U.S. a unique advantage in the future.
This is the kind of mobilization needed to make U.S. oil and gas production less expensive, easier and free of trouble. It’s what will keep the shale boom going.
John J. Interval
Professional petroleum geologist
This letter appeared in the Charleston Gazette Mail's opinion section and was authored by John J. Interval, a professional petroleum geologist. Click here to read it on the publication's website.