North Dakota Tops Alaska in Oil Output

Who would have expected this headline? It is just part of a revolution in energy that is so big that we are often not seeing it. The battle of the 1970s - the “energy crisis” of my youth - is finished. We won. New technology has made a mockery of the whole idea of peak oil or energy shortages. The challenge of the next decade will be something complexly unexpected. We will have such a surplus of fossil energy that alternatives will be unprofitable. I don’t know if this bothers me or not.

For my entire adult life, I have believed implicitly that we were running out of fossil fuels. I am not talking about the theoretical sense that someday everything will end. I am talking about the real belief that fossil fuels would essentially run out in my lifetime. I am now certain that this cannot happen. I doubt we will face a real crisis within the lifetimes of my children or grandchildren.

The idea that we would run out of oil and gas was very comforting to a young environmentalist, as I was back then. I could feel superior to those who were using gasoline etc. Their consumption became my business. I had a right to be outraged. But it also appealed to the puritan tendencies that lurk just below the surface of environmentalism. We could absolutely predict that this profligacy could not endure. We would run out of oil and gas soon. We were in the decline management business. Our president, Jimmy Carter told us as much.

This is not what happened. Today we have more and more oil and gas in the U.S. and even more in the rest of the Americas. In the next decade, the center of hydrocarbon production will be the Americas, not the Middle East. Our challenge will be energy surpluses not shortages.

The remaining objection to fossil fuel is the CO2 effect on global climate and this is precisely the problem. Climate change is a hard sell. It was much easier to claim that we were going to run out of oil and gas. IMO, the abundance of oil and gas will doom most biofuels. It will always be difficult for biofuels to compete because of where they come from. Biofuels are an essentially agricultural product, which means that they require inputs of land and labor generally significantly greater than gas and oil. Beyond that, the raw material for biofuel is rarely very energy dense. That means that transport costs will be high. When prices for gas and oil are very high, biofuels are viable, otherwise not so much.

The energy market is unpredictable. The only thing that seems to be constant is that we underestimate the effect of human inventiveness and innovation. This is because of a static view of energy. Whether we see the energy glass as half empty or half full, most people think that there is indeed a quantity of energy that will be consumed. This is not true, or more correctly it is incomplete. There really is no such thing as a natural resource in a natural state. Every resource is valuable only because of human activity and this human factor is the big variable or multiplier.

In the future, we will often have too much energy, but never enough. This results from people's changing expectations and not from the resource itself. Where it comes from will sometimes be a big surprise. Even places like North Dakota.

Posted by Christine & John at May 20, 2012 12:11 AM
Comments
Comment #344846

You do realize that fossil fuel burning does cause unpredictable and dangerous climate change? Maybe not such good news.

Posted by: bills at May 20, 2012 8:02 AM
Comment #344849

No really. When you factor in environmental cost, health cost etc. to fossil fuels alternates, still an infant industry, start looking better and better. When biofuels finally turn to the use of agricultural by-products they will look even better. Already solar panels have come down in cost dramatically. By the way that is the real story with Solyndra. They failed to invest in new methods and materials and got outsold. There is research in direct photosynhtesis going on. There are serious improvements happening all over.
We have discussed the cheap oil problem at lenghth previosly. Yes the oil trust can always sell cheaper than alternates if we let them. The question remains as to whether we should.

Posted by: bills at May 20, 2012 8:55 AM
Comment #344850

bills

The challenge is very inexpensive fossil fuels. We can decry the potential environmental costs, but the equation has changed.

We used to be able to say that we would run out of oil and gas … soon. The new reality is that we have more of these things and will not run out within the lifetimes of anybody living today.

So whether or not we like this situation, we have to deal with it.

The simple solution, which I have long supported, is a tax on carbon fuels. This is the only thing that has a chance of changing the equation.

IMO - we will develop relatively cheap solar soon. It is happening already. I don’t have much confidence in biofuels. The idea of byproducts is a non-starter except as biomass, which is very simple and not particularly popular among policy makers since they cannot take credit as much.

I once had confidence in cellulose ethanol. This is not going to work. Even if we develop technologies that allow us to turn stalks and wood chips into ethanol, which has been elusive, the problem is bulk. These things are very bulky and heavy. We should just use the biomass, if we are to use them at all.

Re fossil fuel good news - natural gas is much cleaner than oil and coal. Gas is the largest component of the “new” fossil fuel. We currently use coal to generate half our electricity. Our eco-Euro friends are pushing MORE into coal and the Chinese are building a coal plant every week. If we can replace some of that coal with gas, it will be good for the environment. It is not a perfect outcome, but it is better than the possible alternatives.

Posted by: C&J at May 20, 2012 9:15 AM
Comment #344854

C&J,
Some minds are still hard to change; however, change they must. For you see fossil fuel is not cheaper than wind energy. Because why we have the expense of drilling for natural gas or oil, setting up the wells, pipelines, and distribution centers, with wind all we have is the cost of equipment and power lines.

And why we can talk about jobs that will come and go, by using Home Grown Energy the average American can have an income independent of the wishes of a few corporate heads. In fact, no matter how much electricity (energy) our grandchildren will need to operate (feed) the corporate beast wind can meet the demand which cannot be claimed by the oil companies. Thus, we have use of raw resources vs. renewable resources and why fossil fuel like whale oil does have the ability to do things wind cannot do so what will future Americans in the next 75-100 years do if we burn up those resources because we don’t want to invest in a better energy system.

Than we have climate change as an issue. And why I don’t care where you stand on the experts’ opinions on the subject, I wonder how long you would last if put into a chamber where the CO2 was steadily increased. For why those over the age of 30 might not have to worry if governments and societies keep on using fossil fuel since most won’t see 2050. Nevertheless, given the duty and responsibility to the children who will see the next century can you tell me with certainty the burning of fossil fuel needed for a 128 Giga Watt World will not blacken the sky?

Now, we can talk about the oil companies controlling the profits of Commerce, Industry, and Trade or how new corporations using the technology of crystal generators and wire can use the long history of wind power to govern the profits of consumers and corporations. However, facing a global market of cheap labor and management or a constant local and national market operating in the fear of Corporate Raiders(20th Century MBA Teachings) do we not use the technology of wind energy to create an energy system every American can profit from which depends on the Demand of Government and Society?

Posted by: Henry Schlatman at May 20, 2012 10:49 AM
Comment #344856

M

Posted by: KAP at May 20, 2012 11:48 AM
Comment #344857

C&J,
So, the energy policy of the Obama administration has been a success?

Posted by: phx8 at May 20, 2012 11:49 AM
Comment #344858

Henry

Gas is indeed still cheaper than wind; it is more reliable and much easier to transport with existing technologies and networks. This may change in future, but it is the situation that we need to address today.

Natural gas is also widely distributed. Wind, interestingly, is not available everywhere. The wind blows everywhere, but in much of the U.S. it is unreliably sparse.


But if you want to set up a wind generator at your home, you are free to do so, providing the local environmentalists allow it.

phx8

All the gas coming on line today was discovered and exploitation begun before Obama took office. Obama himself claims to be in favor of gas and oil from unconventional sources, but the actions of his administration do not support his words.

Posted by: C&J at May 20, 2012 1:01 PM
Comment #344862

I am going to post this on all three columns; since no one seems to be able to contact the manager of WB, I must believe Stephen Daugherty has taken it upon himself to block me from being able to read comments. After contacting other writers on WB (privatly), it appears I am not the first to be shut down by Daugherty. So I am to believe when Daugherty hears something he doesn’t like, he just screws up the system.

Posted by: Frank at May 20, 2012 2:36 PM
Comment #344863

C&J,
After searching, I cannot find any examples of how the Obama adminstration has taken actions unfavorable to the development of the North Dakota oil field. Can you provide an example?

One article cited the Keystone pipeline, but that pipeline has nothing to do with North Dakota or US oil. It involves Canadian oil being shipped across the United States for export.

The ND field (and Canadian fields) rely on oil being above $40 or $50 per barrel. Global Warming remains a big concern.

Posted by: phx8 at May 20, 2012 2:47 PM
Comment #344864

C&J write; “Today we have more and more oil and gas in the U.S. and even more in the rest of the Americas.”

I read in Time Magazine this morning that new gas discoveries in Africa are astoundingly huge. If only the looney leaders in some of those countries will allow it to be developed and used to benefit their own people it will be a Godsend.

Posted by: Royal Flush at May 20, 2012 2:51 PM
Comment #344866

phx8

The Obama folks are going slow on gas leases. They just are not being helpful. It is the old union trick of just doing what you have to and no more.

Re Keystone - it is not directly related to oil in North Dakota, but it is related directly to the use of alternative oil and gas. It shows the Obama attitude.

Royal

The world is evidently full of gas and oil and it is distributed widely when the energy exploration is done with innovative technologies.

Human ingenuity again trumps resource pessimism. We have seen this several times in our lifetimes and history is essentially the story of losers giving up and winners figuring out ways to go forward.

Posted by: C&J at May 20, 2012 2:59 PM
Comment #344867

C&J,
Is the Obama administration “going slow” on gas leases?

“Last year, American oil production reached the highest level in nearly a decade and natural gas production reached an all-time high. Salazar said that America’s dependence on foreign oil has gone down every single year since President Obama took office.”

http://www.realvail.com/article/1433/Salazar-urges-oil-gas-industry-to-tap-public-lands-already-leased-for-drilling

If you cannot provide any facts or supporting evidence, I have to conclude the oppostion to the Obama administration energy policy is mere partisanship, the denial of a successful achievement simply because it is Obama achieving it.

The Obama administration and Democrats have consistently opposed using taxpayer dollars to provide billion dollar subsidies to the oil gas industries, the most profitable industries in the world. Is this what you mean? Because I see those subsidies as an example of conservative corruption, not hostility to the energy industry.

Posted by: phx8 at May 20, 2012 3:44 PM
Comment #344872

m

Posted by: KAP at May 20, 2012 8:43 PM
Comment #344875

phx8

Salazar is a good man. But the Obama policy has not been so good. This is from US News, but you can get similar stats anywhere you want.


The American taxpayer collected 258 times less revenue from offshore lease sales than they did during the last year of the Bush administration:

2008: $9,480,806,620
2009: $1,181,075,491
2010: $979,569,294
2011: $36,751,111

This is onshore. 2010 was the lowest on record. The fact that 2011 was a little better is like being the tallest of the 7 dwarfs.

http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/oil___gas_statistics/fy_2011.Par.19679.File.dat/chart_2011_03.pdf

Let me point out a technical issue. The top chart is calendar years. Notice the big drop in revenue when Obama takes over. The second chart is Fiscal Year. FY starts in October, which means that FY 2009 is still a Bush year. Look how it drops off in FY 10. Gas and oil production are high because of the larger number of leases and production put in place BEFORE Obama.

Salazar is telling the truth, but it is not a tend on which Obama had any positive influence. It is typical of the Obama method to take credit for positive developments and shun the bad ones.

He inherited a bad economy, which he did little to fix. He inherited a growing energy production, which he did little to help. Which does he take credit for doing?

Posted by: C&J at May 20, 2012 8:54 PM
Comment #344876

KAP

You are allowed to write a full comment.

Posted by: C&J at May 20, 2012 8:56 PM
Comment #344878

Obama has lost WV because of his own words on coal; which is their livelihood.

Posted by: Billinflorida at May 20, 2012 9:33 PM
Comment #344880

WV went red in 2000, 2004, and 2008. In the last general election Obama won by a huge margin, yet WV voted 55 - 42 for McCain. Obama didn’t lose WV. He never had it, and never needed it.

C&J,
Revenue from offshore lease sales means nothing. About half of all existing tracts already sold have never been tapped in the first place.

To repeat: “Last year, American oil production reached the highest level in nearly a decade and natural gas production reached an all-time high. Salazar said that America’s dependence on foreign oil has gone down every single year since President Obama took office.”

The Obama administration is accomplishing exactly what most Americans want to see in terms of energy policy. You wrote the article about ND in the first place. Handing over additional land and taxpayer money to Big Oil and Coal just because they want more doesn’t mean much- at least, nothing positive. It just demonstrates the corruption at the heart of conservatism, which is in thrall to big corporations at the direct expense of the interests of the American people.

Posted by: phx8 at May 20, 2012 10:46 PM
Comment #344881

phx8

Surely you understand that oil and gas production doesn’t just come online from exploration to production in only two years. NONE of the wells currently producing oil and gas were found, planned & inaugurated during the Obama time.

This really is typical Obama.

But let’s make a deal. If you want to give Obama credit for things that began before he was elected, isn’t it fair to blame him for other things. So if you all will never again refer to the problems Obama “inherited”; I think we can give him could give him credit for oil and gas he inherited.

Posted by: C&J at May 20, 2012 11:00 PM
Comment #344885

Had some problems with all the comments loading C&J till I found out from Stephen about the F5.

Posted by: KAP at May 20, 2012 11:35 PM
Comment #344886

By the way, the production of ND oil and Canadian oil sands is a proof of Peak Oil. These kinds of deposits are not economically viable unless oil remains at prices of $40 or higher. They are marginable deposits available in large amounts, but not without big investments and high costs- financial costs as well as environmental costs.

In the past, you’ve advocated gas taxes to drive the price high enough in order to force development of other energy alternatives. I’d rather not see that approach. I’m not saying it wouldn’t work. I’d just prefer not to see taxes drive the engine. The obvious move is to end government subsidies for Big Oil- that really is just embarrassing- and instead aim increased federal spending towards alternative energy R&D, with research grants at state & private universities, and a tax credit initiative to replace all gas-powered vehicles with electric & solar powered ones in a matter of years. It could be done, it would be great for business, it would help national security, and it would reduce the need to a lot of military spending in the Middle East.

Posted by: phx8 at May 20, 2012 11:39 PM
Comment #344893

phx8-
You’re right. As much as C&J would like to believe that this is the dawn of a new fossil fuel future, he misses something critical here: the new sources have a price floor on them, one that will keep the the supply expensive, even if it lasts longer.

It’s not merely a question of how much oil you can get, but how much it takes to get it up.

Is it good news for consumers that oil hasn’t run out? At this point, yes. But all booms end, as any Texan like myself can tell you, and North Dakota will see the end of its boom within the next few years, just as Alaska sees the decline of its supply.

The question with energy is whether we learn our lesson early or late, whether we go in with an energy surplus at our backs, or an energy defict at our feet.

Posted by: Stephen Daugherty at May 20, 2012 11:45 PM
Comment #344899

phx8

Peak oil is a theoretical concept. It is true, as it “peak time” i.e. at some point half of the earth’s life is done. But it means nothing to us in any practical way.

Indeed, if we talk about oil at $5 a barrel, we have run out entirely.

Re ending subsidies - I am in favor. We should end subsidies. This would not much drive up the cost of gasoline and we would be stuck with the same problem of fossil fuels trumping the alternatives.

Re replacing cars with solar powered or electrical - solar powered does not currently have sufficient reach. Currently half our electricity is generated by coal. So an electric car essentially runs on coal.

Stephen & Phx8

There is indeed a price floor for ALL energy. ALL energy. Currently the floor for gas and oil is significantly lower than it is for alternatives.

I will be delighted when something like solar or wind gets to be as cheap or reliable as fossil fuels. Until that happy day, however, the boom in gas is the best environmental news in a long time. Gas will replace coal in some electrical generation. It produces around 1/3 as much CO2 and much less of other sorts of pollution.

Posted by: C&J at May 21, 2012 12:00 AM
Comment #345030

C&J-
The price floor for oil and natural gas will gradually rise, while even in the past few years, solar and wind have dramatically lowered. Which way do you want your energy costs to go?

Posted by: Stephen Daugherty at May 22, 2012 3:52 PM
Comment #345062

Stephen

When solar becomes cheaper and more convenient than gas, people will switch over to it. It will require no mandates or subsidies.

Posted by: C&J at May 22, 2012 10:41 PM
Comment #345103

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