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Longer leases in frontier areas backed

Shales Give Basis for Rosy NPC Resource Report

By LOUISE S. DURHAM, EXPLORER Correspondent

Do you catch yourself sometimes feeling antsy over the possibility of inadequate supplies of domestic fuel now and into the future?

Results of a recent study by the National Petroleum Council (NPC) may calm you.

According to the Institute of Energy Research’s overview of the NPC study’s findings, America could have enough oil resources to meet today’s oil demand levels for decades – without imports from certain countries who really don’t like us much, if at all.

There’s also a predicted decades-long supply of “homemade” natural gas, mainly from factoring in the vast shale gas resource.

Just as with shale gas, the study notes that hydraulic fracturing will open up huge shale oil resources for development as well – an occurrence we’re already seeing.

But before you relax and toss your Valium supply, keep in mind that the jury is still out over the continuing implementation of hydraulic fracturing in a number of key areas.

Among other issues, hard core opponents appear to be convinced that many people, particularly in the vicinity of disposal wells receiving fracturing wastewater, will soon reach their demise from fresh water supplies supposedly contaminated by this common, decades-long oilfield practice.

Then there are those pesky little earthquakes that are becoming relatively commonplace, principally in the vicinity of hydraulic fracturing/disposal operations.

But that’s a whole other story for another day.

Study Highlights

A few of the highlights presented in the oil segment of the NPC study are:

• The United States is the world’s third largest oil producer, after Russia and Saudi Arabia. In fact, Goldman Sachs noted it expects the United States to take the top spot as the largest oil producer by 2017.
• The United States and Canada combined produce 4 percent more oil than largest global oil producer Russia.
• Domestic sources of oil in the United States include tight oil e.g., the Bakken and Eagle Ford formations, offshore Gulf of Mexico and Atlantic and Pacific coasts, the Arctic, and shale oil deposits in Colorado, Utah and Wyoming.

Developing these resources will necessitate assistance from the federal government through their inclusion in the 2012-17 leasing program.

• Two scenarios were evaluated: Constrained, or limited (assumed limited resource access, constrained technology development, greater regulatory barriers); and unconstrained (assumed more access and substantial technology advances).
• Oil from shale formations could produce as much as three million bopd by 2035.
• Together, the United States and Canada could produce up to 22.5 million bopd, which is today’s demand volume. With increased demand, some imports still would be necessary.

Step on the Gas 

Regarding the natural gas scene, the NPC study results noted:

• The United States is the largest producer of natural gas worldwide. In combination with Canada, the two produce 25 percent of the world’s natural gas supply.
• Hydraulic fracturing and horizontal drilling triggered a reassessment of the natural gas resource base, showing significantly higher levels than only a few years back.
• The natural gas resource base could supply more than 100 years of demand at current consumption levels, and more than five decades at much expanded levels.

The classification of natural gas as a clean fuel for purposes of clean energy standards is included among the NPC’s list of recommendations.

One recommendation stands out in particular: Allow longer lease times for frontier areas, such as ultra-deep water and the Arctic, which are especially challenging both in the planning stage and the actual operations.

Additionally, the NPC advocated:

• Inclusion of environmental footprints and full fuel cycle impacts when comparing different energy sources and technologies.
• Assembling industry-led, regional “councils of excellence” to ensure that best practices for safe natural gas development are shared among all companies.
• Devising government regulations that balance prescriptive and performance-based regulations.
• Maintaining tailored royalty relief programs that serve to encourage expedited development and production.