America @ $100/Barrel: How Long Will the Oil Last?
Only 120 of the world's 4000 active oil and natural gas fields satisfy a
remarkable 40 percent of total global consumption. Based on data compiled by
geoscientists at the University of Texas, this map pinpoints 932 giant
fields—those with estimated reserves of at least 500 million barrels of
ultimately recoverable oil or gas equivalent. Although discoveries of these
megafields peaked in the 1970s, drillers using new technologies have located
69 new giants since 1999 and anticipate finding up to 33 more before the end
of the decade. Below are the biggest hits of the past eight years, including
major discoveries within our own borders that could help reduce imports of
foreign oil. — Davin Coburn
EXPANDING SUPPLY
These days everyone is
worried about oil. The primitive black goo has been linked to
climate change, economic disruption and other problems, but make no
mistake: We still need oil, and lots of it. Not only is American demand
rising—this year it’s expected to top 21 million barrels per day—but
ascendant economies in India and China have developed huge appetites for
the stuff. The stark reality is that the supply is finite. "Peak oil"
theorists argue that production is already maxed out, meaning imminent
shortages and sharper price spikes; more optimistic experts believe that
day is 20 to 30 years away. Both camps agree that the task ahead is
twofold: Develop new supplies while learning to stretch existing reserves.
The Relentless Search
There has not been a major find on U.S. soil since Prudhoe Bay in 1968,
which means most major exploration has moved to the deep waters of the
Gulf of Mexico, where drilling and production are difficult and expensive.
Last year, a Chevron-led consortium announced the discovery of the Jack
field, 270 miles off Louisiana. It may hold 15 billion barrels, which
would more than double domestic reserves. "The technology that is being
brought to bear is phenomenal," says energy writer Robert Bryce, author of
Gusher of Lies. "What we are seeing today in offshore drilling is the
terrestrial version of the space program." Bryce is among those pushing to
open offshore leases along the East and West coasts currently under
federal moratorium but estimated to hold as much as 19 billion barrels of
oil and 86 trillion cu. ft. of natural gas.
Tapping vast unconventional sources that don’t flow to the surface is also
hugely challenging. The
oil sands of Alberta, Canada, contain 175 billion barrels of proven
reserves—the largest in the world outside Saudi Arabia—but the oil costs
as much as $15 per barrel to produce, compared to $2 for Saudi crude.
Likewise, shale deposits in Colorado, Utah and Wyoming hold promise, but
no one has yet figured out how to extract them at a profit. Royal Dutch
Shell has placed a $200 million bet that it can unlock Colorado’s Green
River Formation, which could produce 4 million barrels per day—20 percent
of current U.S. consumption.
Priming the Pump
(Photograph by Martin Dubois)
Pumping oil is surprisingly inefficient: For decades, companies
relied on ground pressure and crude secondary well-flooding methods that
recovered just one-third of a field’s reserves. Now, through enhanced
oil recovery techniques, companies can collect up to three-quarters,
dramatically lengtheninga field’s useful life. — D.C.
CO2
Injecting carbon dioxide into the ground increases reservoir pressure
and the fluidity of heavy, gummy oil, enabling it to escape rock pores
and flow toward wells. It takes about 8000 cu. ft. of CO2 to get an
extra barrel of oil.
STEAM Injected
steam reduces oil’s viscosity, which increases flow rates. Shell claims
that in the past decade steam injection has enabled it to produce more
than a billion additional barrels of oil from a California field
discovered in 1911.
CHEMICAL
Surfactants can form a soapy film in the well, lubricating oil so it
flows to well bores. A quarter of the oil from China’s massive Daqing
field, which produces more than 1 million barrels per day, is recovered
by this means.
MICROBES When
introduced into an oil reservoir, microbes plug small channels in the
rock, forcing oil through larger pores. They also generate surfactants
and carbon dioxide. One Texas field boosted production by 43 percent—but
it took two years.
ULTRASOUND In a
recent development, the Pacific Northwest National Laboratory in
Richland, Wash., has conducted lab tests on a device that is mounted on
well-bore pipes, where it uses ultrasound to heat flowing oil, rendering
it less viscous.
EXTENDING SUPPLY
Moving Target
Since the oil age began in 1859, the world's producers have pumped
approximately 1 trillion barrels from the earth. At current rates of
production, they could pump the second trillion by 2030. A hotly debated
question: When will our global exploitation of this nonrenewable resource
reach the pinnacle of production, known as peak oil? The most pessimistic
pundits, such as Kenneth Deffeyes, professor emeritus of geosciences at
Princeton University, speculate that we've already peaked, with social and
political upheavals soon to follow. "By 2025," he has written, "we're going to
be back in the Stone Age." But energy market analysts such as Michael Lynch,
president of Strategic Energy & Economic Research in Amherst, Mass., believe
that pessimists overlook the law of supply and demand: As cheap supplies
dwindle, prices start to rise. Higher prices reduce demand by forcing
consumers to use less. They also spur efforts to develop previously
uneconomical energy sources. These market forces, optimists say, mean oil
won't peak for at least another 20 years and that our economy will have time
to adjust. This graph reflects a centrist position. Based on data compiled by
the International Energy Agency, a consortium of experts from 27 countries, it
projects continued increases in the production of both natural gas and oil.
— D.C.
Moving Beyond Fossil Fuels
Our total energy needs are dictated not only by supply, but also by demand.
Every barrel of oil saved through conservation or the use of alternative
sources is just as valuable as a barrel pulled from the earth.
Pioneering conservationist Amory Lovins coined the term "negabarrels" to
refer to the savings that can be reaped by making buildings and vehicles more
efficient.
Corn ethanol is likely not a long-term solution: If all the corn in the U.S.
were converted to ethanol, it would provide only 6 percent of the nation’s
energy needs. Cellulosic ethanol, though, can be produced from virtually any
carbon-based stock, including wood and solid waste. At the recent Detroit auto
show, General Motors
announced a joint venture with cellulosic-ethanol startup Coskata. In
December, Silicon Valley startup Nanosolar introduced solar panels that can
produce electricity for around $1 per watt—less than the cost of power from
coal-fired plants.
Then there are two old standbys: nuclear power and natural gas. Nuclear power
is a cost-efficient and nearly carbon-free energy source but it comes with
environmental concerns that since the 1970s have handcuffed plans for any new
construction. Thanks to recent incentives, the Nuclear Regulatory Commission
expects to take applications for 32 new reactors by 2010. Natural gas is a
clean fuel primarily produced domestically; horizontal drilling is tapping
hard-to-reach but vast deposits like the Barnett Shale surrounding Fort Worth,
Texas. These new supplies could spur utilities to rely more on gas to generate
electricity. By 2017, though, oil and gas are still expected to make up 60
percent of the American energy portfolio, says Bob Fryklund of the Houston
consulting firm IHS.
In the end, the real question shouldn’t be how long will the oil last, but how
long will the energy last? With more efficient vehicles, alt fuels and cleaner
electric power all coming on line over the next few years, oil may well become
a smaller part of the total energy pie. In fact, some analysts predict that
today’s high prices will spur so much progress in conservation and alternative
sources (not to mention new oil exploration) that oil prices could actually
fall dramatically. That sounds like a problem most people could live with.
Oil Alternatives
Breaking our fossil fuel dependency will require plugging into the grid
instead of pulling up to the pump. Passenger vehicles chug 40 percent of the
oil Americans use, but change may be coming: Chevy
promises the Volt in 2010, and numerous plug-in concept cars—like the
electric Aptera—debuted this year. Meanwhile, inexpensive electricity
could also eliminate oil-based heating—and nearly half of the natural gas
consumption in electrical production and residential heating. Here are the
pros and cons of some leading energy options. — D.C.
Wind Energy
+
Wind farms will
generate more than 1 percent of U.S. electricity this year. The
only reason projections aren't higher? The industry grew 45 percent last
year and now it's running out of turbines. The American Wind Energy
Association speculates that this barely tapped resource could provide 20
percent of U.S. power by 2020.
-
That will only happen if the money is right:
Congress approved a 2-cent-per-kilowatt-hour federal tax credit for wind
installations in 2005, but the credit is set to expire at the end of this
year. In 2004, the last time the subsidy lapsed, construction of new
installations fell 77 percent.
Solar Energy
+
The U.S. solar
industry grew nearly 60 percent last year—but still ranks below
the wind sector. Google and Wal-Mart made headlines with workplace
installations, and residential use continues to grow. The industry hopes
solar can supply 200 gigawatt-hours per year by 2030—enough to power
20,000 households.
-
Money remains the issue here, too. It can
cost $25,000 to retrofit a home with a basic 3-kilowatt solar system, and
while prices for panels have dropped in the past 30 years, they'll have to
keep coming down to meet those industry goals.
Ethanol Production
+
This biofuel may
become a crucial bridge to electric cars, and engineers at
Coskata, a startup company in Warrenville, Ill., say they can create
ethanol for
less than $1 per gallon. The company hopes its first commercial plant
will produce 100 million gal. of ethanol per year by 2011.
-
Coskata engineers claim that each unit of
energy input generates 7.7 times as much in output, so they may have
solved ethanol's sluggish energy balance issue. Still, one major hurdle
remains: Fewer than 1 percent of the nation's gas stations are equipped to
dispense ethanol.
The Case For Conservation
Given the technical challenges and expense of finding new sources of
petroleum, many experts think conservation and efficiency hold tremendous
potential for reducing dependence on foreign energy supplies while boosting
productivity and prosperity at home. Here are the most promising measures.
— D.C.
Better Mileage | 1 Billion Barrels
Saved Per Year
From 1975 to 2000, American cars cut their
fuel use by the equivalent of 2.8 million barrels of oil per day, spurred
largely by Corporate Average Fuel Economy (CAFE) laws. Then progress
stalled. December's energy law will
raise CAFE standards to 35 mpg by 2020, but pushing them to 40 mpg
would cut oil demand by 1 billion barrels per year, roughly our current
imports from Saudi Arabia, Iraq and Venezuela combined.
Improved Mass Transit | 45 Million
Barrels Saved Per Year
Public transportation ridership has risen 25
percent since 1995. The savings if one-third more people rode mass
transit: 45 million barrels per year.
More Energy-Efficient Homes | 30
Million Barrels Saved Per Year
One recent study found that weatherizing
oil-heated houses produced average savings of nearly 18 percent. If all
oil-heated homes achieved this level by 2013, the National Resource
Defense Council estimates it would save nearly 30 million barrels per
year.
Streamlined Air Traffic | 18
Million Barrels Saved Per Year
The Federal Aviation Administration's
NextGen GPS-based air traffic control system is expected to reduce
delays and speed takeoffs and landings. A Department of Energy study
estimates those measures could save the equivalent of 18 million barrels
per year by 2013.
Since the oil age began in 1859, the world's producers have pumped
approximately 1 trillion barrels from the earth. At current rates of
production, they could pump the second trillion by 2030. A hotly debated
question: When will our global exploitation of this nonrenewable resource
reach the pinnacle of production, known as peak oil? The most pessimistic
pundits, such as Kenneth Deffeyes, professor emeritus of geosciences at
Princeton University, speculate that we've already peaked, with social and
political upheavals soon to follow. "By 2025," he has written, "we're going to
be back in the Stone Age." But energy market analysts such as Michael Lynch,
president of Strategic Energy & Economic Research in Amherst, Mass., believe
that pessimists overlook the law of supply and demand: As cheap supplies
dwindle, prices start to rise. Higher prices reduce demand by forcing
consumers to use less. They also spur efforts to develop previously
uneconomical energy sources. These market forces, optimists say, mean oil
won't peak for at least another 20 years and that our economy will have time
to adjust. This graph reflects a centrist position. Based on data compiled by
the International Energy Agency, a consortium of experts from 27 countries, it
projects continued increases in the production of both natural gas and oil.
— D.C. 
Breaking our fossil fuel dependency will require plugging into the grid
instead of pulling up to the pump. Passenger vehicles chug 40 percent of the
oil Americans use, but change may be coming: Chevy
