Business

No Peak Oil: Proved US Oil And Gas Reserves Continue To Increase

Daily Caller News Foundation logo
Michael Bastasch DCNF Managing Editor
Font Size:

It was only four years ago that economist and New York Times Columnist Paul Krugman sounded the alarm on peak oil, lamenting that high oil and commodity prices reflect the fact that we live in a “finite world.”

But now oil prices are plummeting as U.S. oil production booms due to hydraulic fracturing, or fracking, and horizontal drilling. On top of that, a new government report indicates that proved U.S. oil reserves have grown for the fifth year in a row.

“U.S. crude oil proved reserves increased for the fifth year in a row in 2013, a net addition of 3.1 billion barrels of proved oil reserves (a 9% increase),” according to the Energy Information Administration (EIA).

Proved reserves are oil and gas plays that are “recoverable under existing economic and operating conditions,” says EIA. As technology improves and the price of oil hits the right level, proved reserves can dramatically increase — as the U.S. has been seeing with the advent of fracking.

The increase in proved reserves came from North Dakota and Texas, where oil companies are continually breaking production records. In September, Texas produced 3.3 million barrels of oil per day and North Dakota produced 1.2 million barrels per day.

In fact, North Dakota now has more crude oil proved reserves than the Gulf of Mexico, ranking only behind Texas. The Bakken and Three Forks Shale play in North Dakota is now the largest tight oil play in the U.S.

“U.S. natural gas proved reserves increased 10% in 2013, more than replacing the 7% decline in proved reserves seen in 2012, and raising the U.S. total to a record level of 354 trillion cubic feet (Tcf),” EIA reported.

According to EIA, Pennsylvania and West Virginia accounted for 70 percent of the increase in natural gas proved reserves for 2013.

Huge increases in oil production have contributed to big declines in the price of oil since June. Oil prices have slid since June and now the cost to buy a barrel of oil is below $70.

Low oil prices and news that OPEC would not cut production to buoy prices has been seen as troublesome for U.S. oil companies by some energy experts. As oil prices drop, profit margins from extracting higher cost shale oil disappear and oil companies make fewer investments into future production.

Luke Rahbari with Stutland Volatility told TheStreet TV that “due to many OPEC members’ lower production costs, they can afford to wait out these low prices,” according to TheStreet. “On the flip side, many Canadian and U.S. shale producing companies cannot allow crude to fall too low.”

“Below $45 to $48 per barrel, most shale oil producing companies would be forced to cut production, since it would no longer be profitable for them to pump,” Rahbari explained. “For that reason, the $45 to $48 per barrel level should be a significant price support.”

But others are more optimistic, saying that companies will continue to extract U.S. shale oil even if the price continues to drop.

“OPEC is hoping lower break-even prices will reduce shale production,” energy expert Paul Stevens wrote in Newsweek. “Various estimates for the U.S. shale break-even price have been bandied around (usually in the realm of $60 to $80 per barrel). Most are far too high, because they ignore the fact that the recent boom in shale operations has grossly inflated project costs.”

“The current level of shut-in price for shale oil is again debatable, but almost certainly is well below $40 per barrel,” Stevens wrote. “Thus it will be some time before existing shale oil production falls, even if prices stay low. Should the oil price fall towards variable costs, threatening shale supply, it will be the OPEC producers who must blink first. They will then try to take back control of the market, if they can.”

Follow Michael on Twitter and Facebook

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

PREMIUM ARTICLE: Subscribe To Keep Reading

Sign up

By subscribing you agree to our Terms of Use

You're signed up!

Sign up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!

Sign up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!

Sign Up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!
BENEFITS READERS PASS PATRIOTS FOUNDERS
Daily and Breaking Newsletters
Daily Caller Shows
Ad Free Experience
Exclusive Articles
Custom Newsletters
Editor Daily Rundown
Behind The Scenes Coverage
Award Winning Documentaries
Patriot War Room
Patriot Live Chat
Exclusive Events
Gold Membership Card
Tucker Mug

What does Founders Club include?

Tucker Mug and Membership Card
Founders

Readers,

Instead of sucking up to the political and corporate powers that dominate America, The Daily Caller is fighting for you — our readers. We humbly ask you to consider joining us in this fight.

Now that millions of readers are rejecting the increasingly biased and even corrupt corporate media and joining us daily, there are powerful forces lined up to stop us: the old guard of the news media hopes to marginalize us; the big corporate ad agencies want to deprive us of revenue and put us out of business; senators threaten to have our reporters arrested for asking simple questions; the big tech platforms want to limit our ability to communicate with you; and the political party establishments feel threatened by our independence.

We don't complain -- we can't stand complainers -- but we do call it how we see it. We have a fight on our hands, and it's intense. We need your help to smash through the big tech, big media and big government blockade.

We're the insurgent outsiders for a reason: our deep-dive investigations hold the powerful to account. Our original videos undermine their narratives on a daily basis. Even our insistence on having fun infuriates them -- because we won’t bend the knee to political correctness.

One reason we stand apart is because we are not afraid to say we love America. We love her with every fiber of our being, and we think she's worth saving from today’s craziness.

Help us save her.

A second reason we stand out is the sheer number of honest responsible reporters we have helped train. We have trained so many solid reporters that they now hold prominent positions at publications across the political spectrum. Hear a rare reasonable voice at a place like CNN? There’s a good chance they were trained at Daily Caller. Same goes for the numerous Daily Caller alumni dominating the news coverage at outlets such as Fox News, Newsmax, Daily Wire and many others.

Simply put, America needs solid reporters fighting to tell the truth or we will never have honest elections or a fair system. We are working tirelessly to make that happen and we are making a difference.

Since 2010, The Daily Caller has grown immensely. We're in the halls of Congress. We're in the Oval Office. And we're in up to 20 million homes every single month. That's 20 million Americans like you who are impossible to ignore.

We can overcome the forces lined up against all of us. This is an important mission but we can’t do it unless you — the everyday Americans forgotten by the establishment — have our back.

Please consider becoming a Daily Caller Patriot today, and help us keep doing work that holds politicians, corporations and other leaders accountable. Help us thumb our noses at political correctness. Help us train a new generation of news reporters who will actually tell the truth. And help us remind Americans everywhere that there are millions of us who remain clear-eyed about our country's greatness.

In return for membership, Daily Caller Patriots will be able to read The Daily Caller without any of the ads that we have long used to support our mission. We know the ads drive you crazy. They drive us crazy too. But we need revenue to keep the fight going. If you join us, we will cut out the ads for you and put every Lincoln-headed cent we earn into amplifying our voice, training even more solid reporters, and giving you the ad-free experience and lightning fast website you deserve.

Patriots will also be eligible for Patriots Only content, newsletters, chats and live events with our reporters and editors. It's simple: welcome us into your lives, and we'll welcome you into ours.

We can save America together.

Become a Daily Caller Patriot today.

Signature

Neil Patel