The Natural Resources Defense Council (NRDC) has recently claimed that we at IER were telling a “white lie” by explaining that the United States has 1.4 trillion barrels of technically recoverable oil—enough to fuel our current oil needs for the next 200 years. The United States indeed has 1.4 trillion barrels of technically recoverable oil and this estimate is likely to be an understatement of our oil resources.
On Thursday, January 12, 2012, Tom Donohue, President and CEO of the U.S. Chamber of Commerce, explained that the economy could create many, many more jobs if the federal government allowed access to more taxpayer-owned energy resources. In the speech, Donohue correctly stated that the United States has “1.4 trillion barrels of oil, enough to last at least 200 years.”
For some reason, this irritated NRDC. On their “OnEarth” blog they tried to rebut some of Donohue’s statements by claiming that Donohue had fibbed. Here’s what they wrote:
Fib No. 1
“Recent discoveries have confirmed that this nation is truly blessed with energy resources. We have 1.4 trillion barrels of oil, enough to last at least 200 years.”
This figure is pulled from a December report by the Institute for Energy Research called North American Energy Inventory. But the authors of that report misstated their own source, a U.S. Department of Energy analysis called “Undeveloped Domestic Oil Resources.” Of the over 1 trillion estimated barrels of oil that are still in the ground, only 400 billion are “technically recoverable.” And of that, only a tiny fraction is economically feasible to recover. So good luck filling up your car, Donohue’s kids, when the pumps run dry well short of two centuries from now.
Verdict: White lie
If NRDC actually looked at the report – or any of the myriad government reports on U.S. resources, they would know that we are indeed correct that the U.S. has 1.4 trillion barrels of technically recoverable oil, with total oil resources in the ground estimated at about 3.75 trillion barrels. Also, if NRDC would have looked at the report, they would have seen the multitude of sources documenting the abundance of energy the U.S. and North America contain. For some reason, NRDC and many other like-minded groups and politicians who advocate for more expensive, less reliable forms of energy become agitated whenever the public begins to learn that we have huge energy resources. Maybe that’s what George Will was talking about when he wrote his first column of the year, entitled “The Specter of Abundance.”
The United States has 1.4 trillion barrels of technically recoverable oil (check out the endnote to see the sources of this information).[i] The document NRDC mentioned is one of the sources of information we used for oil obtained from conventional and enhanced oil recovery (EOR)technology, but there are other sources of oil we included in our inventory that are not included in the NRDC rebuttal, including oil shale and updates to the 2006 study cited by NRDC. Particularly missing is the 982 billion barrels of technically recoverable oil shale[ii], which when added to the 400 billion barrels of technically recoverable conventional and EOR oil that NRDC cites, totals 1.4 trillion barrels of recoverable oil. But NRDC also missed the fact that we included current proved reserves of about 20.6 billion barrels and updated the undiscovered resource estimates in the 2006 document they cited for the latest numbers from the Energy Information Administration, making the total recoverable oil in the United States 1.44 trillion barrels.
The sources we used in the December study were all official government sources.
As we explained in the North American Energy Inventory, technically recoverable oil resources is oil that is recoverable with existing drilling and production technologies regardless of economic conditions. This does not include all of the oil in the ground—it is just the oil that could be extracted with known technology. The United States has about 3.7 trillion barrels of oil in the ground, but we currently only have the technology to extract 1.4 trillion of those barrels. But as anyone who has been alive over the past decade knows, technology can change rapidly, and so can economics, and the direction is always towards more energy, not less. Just ask folks in North Dakota, where the Bakken field has seen its estimates of recoverable shale oil multiply to 132 times as much as was estimated just 16 years ago. (The Bakken field is also discussed in our report.) Or look at the record of shale gas, none of which was “economically feasible” less than 10 years ago.
The IER report discusses reserves vs. resources and the impact of technology as follows:
“One reason to view “reserves” estimates with suspicion is the fact that they are constantly in flux. In 1980, the U.S. had oil reserves of roughly 30 billion barrels.[iii] Yet from 1980 through 2010, we produced over 77 billion barrels of oil.[iv] In other words, over the last 30 years, we produced over 150 percent of the proved reserves we had in 1980. If the massive quantities of U.S. oil are made available to explore and produce, the current estimated reserves of 20 billion barrels would certainly increase, providing much more production over decades to come. In other words, reserves are not a stagnant number.”
There are many reasons it’s important to point out just how ill-informed NRDC is on the subject of energy and energy resources, including their own home page, where NRDC trumpets that the New York Times refers to them as “One of the nation’s most powerful environmental groups.”[v] NRDC’s president, Frances Beineke, was appointed by President Obama to his National Oil Spill Commission, ostensibly for NRDC’s expertise in the area of energy. NRDC’s Board reads like a “who’s who” of political, Hollywood and investment activists, including Robert Redford, Van Jones, Leonardo DeCaprio, Laurie David and Laurance Rockefeller. President Obama’s Commerce Secretary, John Bryson, was a founder of NRDC.
So why, you ask, would NRDC – who should know better – attack the Chamber’s Mr. Donohue and the Institute for Energy Research’s Inventory of North American Energy? Perhaps Mr. Will’s first column of 2012 was right on the mark, when he described what the discovery of huge new energy supplies in the U.S. means for those who preach and practice the politics of scarcity:
“A specter is haunting progressivism, the specter of abundance. Because progressivism exists to justify a few people bossing around most people, and because progressives believe that only government’s energy should flow unimpeded, they crave scarcities as an excuse for rationing – by them – that produces ever-more-minute government supervision of Americans’ behavior.”
If the United States has no shortage of energy, but rather, suffers from a shortage of good policies, there will no longer be any justification for government intervention and Washington –directed policies designed to “manage” the shortage. And since the “energy crisis” will have disappeared, so will the opportunities its continued existence gives to those who seek government edicts, rather than market solutions guided by consumers who also just happen to be citizens of a free republic.
[i] Undeveloped Domestic Oil Resources: The Foundation for Increasing Oil Production and a Viable Domestic Oil Industry, February 2006, http://www.fossil.energy.gov/programs/oilgas/publications/eor_co2/ Undeveloped_Oil_Document.pdf and http://www.fossil.energy.gov/programs/oilgas/publications/eor_co2/G_-Updated_U_S__Oil_Resources_Table_2-1.pdf; Assessment of the Undiscovered Technically Recoverable Oil and Gas Resources in the Nation’s Outer Continental Shelf, 2006, http://www.boemre.gov/revaldiv/PDFs/2006NationalAssessmentBrochure.pdf ; USGS, National Assessment of oil and Gas Resources Update (December 2010), http://certmapper.cr.usgs.gov/data/noga00/natl/graphic/2010/summary_10_final.pdf; Development of America’s Strategic Unconventional Fuels Resources, September 2006, http://www.fossil.energy.gov/programs/reserves/npr/publications/sec369h_report_epact.pdf; Technical Announcement: U.S. Oil Shale Assessments Updated, April 2, 2009, http://www.usgs.gov/newsroom/article.asp?ID=2182; EIA, Assumptions to the Annual Energy Outlook 2011, April 2011, http://www.eia.gov/oiaf/aeo/assumption/oil_gas.html, http://www.eia.gov/analysis/studies/usshalegas/pdf/usshaleplays.pdf, http://www.usgs.gov/newsroom/article.asp?ID=2893&from=rss_
[ii] In 2010, the USGS estimated that in-place resources in the Piceance Basin were 50 percent larger than previously estimated (1.5 trillion barrels versus 1.0 trillion barrels). The addition of the 0.5 trillion barrels makes U.S. in-place oil shale resources total 2.6 trillion barrels. Previous estimates put the total economically recoverable oil shale resources at 800 billion barrels. Assuming the same rate of recovery for the additional 0.5 trillion barrels brings the total recoverable resources to 982 billion barrels of oil resources. http://fossil.energy.gov/programs/reserves/npr/Oil_Shale_Resource_Fact_Sheet.pdf
[iii] Energy Information Administration, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=5&pid=57&aid=6
[iv] Energy Information Administration, Annual Energy Review, http://www.eia.gov/totalenergy/data/annual/pdf/sec5_9.pdf.