How Much Oil Does The US Really Have

How Much Oil Does The US Really Have?

No sooner than we came up with the outline of a $1-2 trillion crash program to eliminate US dependence on volatile-region oil plus create an export capacity (see below) using every measure we could think of, than we come across two articles 2 US Department of Energy articles that suggest the US has 1.124 trillion barrels of conventional oil left.
Well, since the official figure you will see for US reserves is 21-billion barrels - just 3-years total consumption, you will be justified in asking what controlled substances has DOE been ingesting and why are we worrying about oil when we should be worrying about why DOE has not made this wonderful stuff available to everyone.
The mystery is resolved once readers recall we had run a piece some months back which said only one-third of available known oil had been recovered in the world. Let's back off a minute to go over the matter in admittedly simple terms.
Primary recovery of oil is when the pressure inside an oil field suffices on its own to push oil out through drilled holes. This is the easy, cheap oil, and yes, the US is just about out of it. Primary recovery gets 10-20% of the oil out.
Secondary recovery comes when you have to inject pressure into an oil field to force oil out. This can be done with water or with CO2. US has been using secondary recovery to get up the percentage of oil recovered to 20-40%. We knew about this technology as surely did most of our readers, its no secret. But whenever we did read about it, it was all "Waaaaaah! It's so expensive! Weep, moan, whine".
What was not known to us - we do have to earn a living and then there's Orbat.com to run, so it's not like we can spend 12 hours a day researching - is that the technology has now advanced to the point that once large quantities of CO2 are available, DOE figures US can comfortably recover 83-billion barrels more.
Now, our program calls for a reduction in use by 5-million of 20-million barrels a day, eliminating volatile region imports, and production from shale and coal of another 5-million barrels, which the US would export while blockading enemy oil. So, for example, if you didn't want the world to suffer when you blockade Iranian oil - a move that will destroy Iran in short order - you would put 2-million barrels a day on the market to make up for the shortfall.
But if all that's needed is CO2, we don't have to go the shale/coal route. That 5-million bbl/day could come from US fields for 50 years. And the nice thing about CO2? You've guessed it - you sequester it from existing coal plants. It can be shipped via pipeline - one project in the works has CO2 being shipped over a 300-km pipeline for use in injecting oil fields. So everyone should be ecstatically happy, including the greens.
You would still need programs that shift our energy from dirty to clean - nuclear, solar, wind etc etc because you still want to run vehicles on fuel cells and not on gasoline, for environmental reasons.
But we're talking about 83-billion barrels, where did the 1.124 trillion come from? Well, developing technologies that exist today can push up secondary recovery to 430-billion barrels. Next, geologists have found that under the secondary layer is yet another layer - we don't know if we are into tertiary recovery yet, perhaps readers can look at the articles closer than we did. But this additional layer is achievable with technologies we can conceive of, but still need to develop. That's how we get to 1-trillion plus barrels.
Yes, the stuff is expensive. And yes, the pure economics of oil say that oil companies will want to develop where they get the most money, so let's be off to distant parts of the world and worry about the strategic dependency later. Economic theory will also tell you when companies are making huge profits doing business as usual, they have no incentive to shift to new technologies.
The problem with all this is that as Orbat.com has repeatedly said, we are not paying $70/barrel for our oil. When you add in the cost of securing that oil - for example, obviously we wouldn't be in Iraq if it did not have oil aplenty and even there they've only scratched the surface because without oil Iraq would not be a strategic interest - we are paying way over $100/barrel. We did this exercise some years ago, we'll do it again soon.
You cannot in any case rely on market mechanisms when you are dealing with something so fundamental as energy procured from volatile regions. If for some reason the flow of Chinese toys to the US is disrupted, that is not a problem. But if the flow of oil is interrupted, we have a big problem. Energy independence, and indeed, the ability to export energy in support of US foreign policy, is a strategic national security issue. It requires top priority - right now.
The government will have to spend money to encourage conservation, demand reduction, and technologies for recovering secondary/tertiary oil because it's spending that and likely more anyway on defense of overseas production areas and the sea lanes.
So if companies say: "well, secondary CO2 recovery makes no sense for us because oil will come in at $80 barrel", then the government has to say "fine, we'll make up that $10" because right now the people, via the government, are paying more than that $10 AND there is no assurance overseas supply wont get disrupted. How much better to subsidize production of US oil than to subsidize Iran and Saudi Arabia.
The two articles can be found at http://www.fossil.energy.gov/programs/oilgas/eor/index.html and http://www.fossil.energy.gov/news/techlines/2006/06015-Oil_Recovery_Assessments_Released.html

The absolute best way for the US to destroy Iran...

...and other enemies like Saudi Arabia is to launch a crash program to substantially reduce oil consumption and to produce oil by other means such as shale and coal-to-oil. US should be installing enough capacity that it exports oil.
Oh yes, we are quite aware of the environmental issues. But freeze that thought for a minute.
Think of a crash program utilizing ALL technologies: more US drilling, coal-to-oil, shale oil, tar sands, N-power, vastly expanded solar/wind, cut transport use by increasing mileage standards/raising taxes. double mileage standards/cut demand by raising taxes.
Let's use round figures. US imports about 13-million bbl/day of crude/products. Lets say US needs to replace 5-million bbl/day that comes from unstable areas and it needs to export 5-million bbl/day to supply the world with oil when it blocks oil exports from countries that need smacking.
Okay, increasing mileage standards/decreasing use can cut 5-million bbl/day. Goodbye imports from volatile areas. Produce 5-million bbl/day with the combination of above technologies. That will be needed when you smack - say - Iran. WE blockade its ports and supply the world with the lost 2 million bbl/day or whatever. Let's arbitrarily assume the US government will need to subsidize this shift to the tune of $200-billion for 20 years. Throw $200-billion more into a mass expansion of N-power - that's the government contribution, the world is awash with liquidity, money for capital costs is not a problem. Why N-power? Because you need to start shutting down coal generation plants both for environmental reasons and to reduce the pressure on coal prices.
Next - back to the greens, and aside from Mr. Dick Cheney we are all greens at some level. Simple politics, and simple good stewardship of the earth says that if you are going to get the greens to agree even on national security grounds, they have to get something in return. So throw $200-billion over 20 years into each of the following: environmental cleanup of the damage caused by the coal-to-oil etc.; $200-billion into subsidies for clean new technologies - solar, wind, whatever; and $200-billion as subsides for mass transit. You are then spending $4 dollars to keep greens happy plus money to shift the existing base from coal to nuclear for every $1 for oil produced by other means.
Forget about Iraq for the moment, assume the regular defense/foreign aid/intelligence budget can be cut by $50 billion/year - say less than 10% of existing spending because we wont have to give a hang about the Middle East. You've paid off that trillion in 20 years. And in 20 years, with new technologies and a vast expansion of existing technologies like wind and solar producing results, you can start shutting down the extra coal and start drawing down on existing coal, which is used mainly for power plants.
You don't want to cut the defense budget? You don't like our figures and you want to - say - spend more on clean-up and subsides for solar/wind etc so less is needed for N-power etc? Okay, would you be happy with an additional $50-billion a year? That's $100-billion/year - what we spend on Iraq without a squeak. It means 0.8% of the current GNP - a lot less of the 2027 GNP. That money won't break any bank - and it will generate millions of good jobs for the US.
It would be nice to build a consensus on this, and if it is presented as a national security issue, and environmentalists are given iron-clad assurances that money will be spent on things they value - reduced consumption, clean-up, new clean technologies - and that the dirty stuff is temporary, they should find it palatable.
After all, no one wants to be held hostage to foreigners who hate America and use our money to try and destroy us. Environmentalists are patriots too.
But if consensus cannot be quickly built - well, the President keeps telling us we are at war, doesn't he? Time to put his money where his mouth is. In war you enact wartime measures.