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Hail, shale! Viva la fracking!
Not only is the United States the top producer of petroleum and natural gas, a new report shows, but the U.S. also has the largest oil reserves of any country on earth--more than Russia and Saudi Arabia--The Financial Times reports:
Rystad Energy estimates recoverable oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264bn barrels. The figure surpasses Saudi Arabia's 212bn and Russia's 256bn in reserves.
The analysis of 60,000 fields worldwide, conducted over a three-year period by the Oslo-based group, shows total global oil reserves at 2.1tn barrels. This is 70 times the current production rate of about 30bn barrels of crude oil a year, Rystad Energy said on Monday.
The combination of hydraulic fracturing and horizontal drilling has made oil and natural gas trapped in shale rock--once practically impossible to reach--now technologically feasible to produce. The result has been a gusher of increased oil production over the past few years.
Fracking’s importance won’t be going away anytime soon. The Rystand report finds that 30% of global recoverable oil is “unconventional”—meaning fracking will be needed to get it out of the ground.
In the U.S. more than 50% of its oil reserves are unconventional. Texas, home of the Permian Basin where fracking is used in the country’s most-productive oil patch, holds more than 60 billion barrels of oil.
Here are two points to take from this news.
First, state-led regulation of fracking is working at safely producing abundant amounts of energy and making vast quantities of domestic energy available. Unnecessary federal interference by EPA, the Interior Department, or other agencies will only stymie this success. In an environment of low oil prices, the federal government shouldn’t put U.S. producers at a disadvantage with duplicative regulations that make fracking more expensive.
Second, oil consumption isn’t going away anytime soon. As the middle class grows in countries like China and India, the demand for vehicles—and gasoline—will increase. One market research firm estimates that 2.1 billion light duty vehicles will be sold by 2035—the vast majority will run on petroleum. Now that they’re allowed to export oil, U.S. companies can help satisfy those growing markets.