US leads in world crude extraction amid concerns over depletion of resources

Oil well and storage tanks in the Texas Panhandle.
Source: DollarPhotoClub

According to new estimates from Bank of America Corp. for this year, U.S. has become the largest producer of crude oil, overtaking the current leaders Russia and Saudi Arabia. This increase in crude oil production is a result of the growing shale extraction.

United States crude oil production for the first quarter of this year amounted to more than 11 million barrels of oil a day. At the same time, Russia mined 10.5 million barrels, and Saudi Arabia, approximately 9.45 million barrels.

It is important to remember, however, that the 11 million barrels is not just crude oil. It is barrels of oil equivalent (boe) and includes both natural gas liquids and condensates. The actual crude oil production in the U.S. amounts to 8.4 million bpd.

The ‘boom’ in crude is mainly due to the exploitation of unconventional resources; mainly shale deposits in Texas and North Dakota. The International Energy Agency estimates that by 2019 oil production in the U.S. will rise to 13.1 million barrels per day. Volume production at this level will continue until 2030 after which there shall be a slow decline in the size of the exploited resource.

However, there is no consensus on the rate of depletion of the resources. Unconventional resources are difficult and expensive to extract. The depletion rate is also much higher than for conventional fields. Production from shale gas wells will usually drop from 60% to 80% in the first year. Conventional reservoirs decline 25% to 40% over the same time. All this puts into question the sustainability of the 13.1 million barrels per day exploration rate.

Having said that, shale drillers and technology suppliers continue to increase drilling and fracking efficiency. Procedures such as refracking and enhanced oil recovery (EOR) can inject new life into mature wells.

In Canada, a CO2-EOR project has been established by Cenovus Energy at the Weyburn Oil Field in southern Saskatchewan since 2000. The project is expected to inject a net 18 million ton CO2 and recover an additional 130 million barrels (21,000,000 m3) of oil, extending the life of the oil field by 25 years.

Meanwhile, in the largest carbon capture project in the US, in Port Arthur, Texas, captured CO2 from industrial operations will be funnelled to oil producers for EOR. The estimate for this single plant is to increase production in the West Hastings oil field (south of Houston) by between 1.6 and 3.1 million barrels annually.

Examples like these show that while depletion rates of the world’s major energy resources are a major long-term concern, innovation in technology might stave off the crisis for good several decades.

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