American energy consumers received some good news this week when the U.S. Geological Service reported that there is at least twice the amount of recoverable oil and three times the natural gas in shale formations that cover parts of Montana and the Dakotas than thought just five years ago.
USGS says there now appears to be at least 7.4 billion barrels of oil that could be recovered from the formations, well over and above the 3.65 billion barrels estimated in the Bakken formation in 2008. Now, scientists say a similar amount can be found in the Three Forks formation, which lies underneath the 25,000-square-mile Bakken area. Drilling into the Three Forks deposits began only recently when the advent of technology and the rise in oil prices made it economically feasible to explore and recover from the equally massive formation.
In addition to oil, these two formations are estimated to contain some 6.7 trillion cubic feet of technically recoverable natural gas, three times the 1.85 trillion cubic feet estimated in 2008.
Many in the oil industry contend the USGS estimates are conservative and that the formations offer even great potential for recoverable oil and gas.
While Secretary of the Interior Sally Jewell and USGS officials say the estimates provide a better understanding of the nation’s domestic energy mix and facilitate wiser decisions for the future, some are suggesting that the United States has turned a corner, achieving a level of cheap fossil fuel energy production that reduces, and even eliminates the need for developing alternative energy resources, or even energy efficiency technology.
These “turned-a-corner” sentiments come from a distinct lack of knowledge or appreciation of history. The massive oil and gas finds in the Dakotas and Montana will not stop the constant volatility of oil prices, the costly security needed to meet our petroleum needs, or the inexorable climb of natural gas prices.
Oil is an international commodity, subject to the whims of often unstable and hostile governments, conflicts in politically turbulent parts of the world, and the vagaries of supply and demand, all capable of sending oil prices to painfully high levels that play out in costly trips to U.S. gas pumps.
After hitting a 10-year low in April, 2012 of $1.90 per million metric British thermal units, natural gas prices are now well more than 100 percent higher, with June futures trading last Friday at more than $4.20. Natural gas is expected to reach up to $7 over the next five years.
The oil and gas discoveries in the Northern Plains will likely offer some relief to the price pressures that are constantly put on our nation’s energy resources, but that relief is only temporary. And it is shortsighted to suggest that any finite resource will offer permanent solutions to persistently growing U.S. energy challenges.
It is interesting to see the advances in renewable energy being made in, of all places, nations with the largest oil reserves in the world. According to a recent report from Ernst and Young, Saudi Arabia, along with Egypt and Morocco, are highly ranked in terms of wind energy, solar power, and all renewable indices, providing a benchmark for the rest of the Middle East/Northern Africa region to follow.
The firm’s Renewable Energy Country Attractiveness Indices ranks 40 countries based on their renewable energy markets, and Saudi Arabia, with the recent announcement of a major solar facility and the financial close on a facility that will manufacture elements to produce solar panels for the entire Middle East, rose in ranking from 14th to 12th. The increasing development of wind and solar energy in Egypt, Morocco and other countries in the oil-rich region suggest a dedication to green power inconceivable only a decade ago.
Renewable energy development in the Middle East offers a lesson in commitment that should not be lost on policy makers here in the United States. Federal and state incentives, like the federal Renewable Fuel Standard, Production Tax Credits and loan programs that accelerate the development of sustainable, domestically produced energy, must be strongly supported and maintained at a level that assures U.S. supremacy in the global clean energy economy.