I got a little irritated Thursday evening when a writer at the National Review Online claimed that the “feds” had “discovered” the largest oil and gas reserve in history, and responded on Twitter as follows:
No, the "Feds" didn't "Discover" a damn thing – the industry did. All the feds did was do a little math. Get it right, @NRO:
Feds Discover Largest Oil, Natural-Gas Reserve in History https://t.co/q4ZyZ9KvVE
— David Blackmon (@GDBlackmon) December 6, 2018
I mean, c’mon, how hard is this to understand? The federal government had literally nothing to do with discovering the Wolfcamp Shale. That work has been done by teams of extremely smart geoscientists, engineers and other professionals at an array of companies in the nation’s oil and gas industry over the last decade.
But, as I noted in my tweet, the USGS does deserve credit for doing some analysis and math and producing yesterday’s amazing assessment that estimates the Wolfcamp Shale contains the following amazing volumes of technically recoverable resource:
- 46.3 Billion barrels of crude oil;
- 20 Billion barrels of natural gas liquids; and
- 281 Trillion cubic feet of natural gas.
These numbers are almost incomprehensible to most people, so it helps to try to place them in some context:
- The most prolific oil resource ever discovered in North America is the Prudhoe Bay field on the North Slope of Alaska. Over the last 40+ years, Prudhoe Bay has produced about 14 billion barrels of crude oil. USGS projects that the Wolfcamp will produce 3.3 times that over its life.
- That 46.3 billion barrels of crude oil represents about 6.5 years of total U.S. consumption. From a single formation in a basin with a dozen different producing formations.
- 281 Trillion cubic feet of natural gas represents 12 years of total U.S. consumption. From a single formation in a basin with a dozen different producing formations.
- Put another way, this is enough natural gas to supply all of our nation’s gas-fired power plants for about 35 years.
- 20 billion barrels of natural gas liquids represents roughly 21 years of total U.S. consumption.
All of that from a single formation in the Permian Basin.
Now, here’s what else you need to understand about this assessment: It is extremely conservative. It is an estimate of how much oil, gas and NGLs can be produced from the Wolfcamp using current technology. If we know anything about the oil and gas industry, it is that technology used in that industry advances literally every day.
The assessment is also based on proven reserves that have been reported to the SEC by oil and gas companies to date. That is also an extremely conservative number based on the drilling that has taken place to date. The industry is in the very early stages of drilling in the Wolfcamp, and will be drilling more wells and proving more reserves there for decades to come.
So, as incomprehensible as those numbers are, know that they represent a fraction of the actual volumes in place that will ultimately be recovered from the Wolfcamp by the very smart people in the U.S. oil and gas industry.
That is all.