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By Eric Schaefer

A veritable torrent of news must have hit the media on Aug. 1. How else can one possibly explain its collective silence greeting the Energy Information Agency's (EIA) release of its annual estimate of U.S. oil reserves?

Its report contains enough good news to fill several days of cable news time. The EIA estimates oil exploration and production companies added 3.8 billion barrels of proved oil reserves in 2011. This is a 15% increase over the agency's 2010 estimate of total proved of 25.2 billion barrels. The jump reported is by no means an isolated event: From 2009 to 2011, the proved reserve estimate has risen by a staggering 8.4 billion barrels. The good news extended to natural gas as well. Proved reserves of wet rose by 10% to 348.8 trillion cubic feet.

Readers of our publications will not be surprised by either the huge jump in proved reserves or the deafening silence in the media. In our second issue -- "From Scarcity to Abundance?" dated Aug. 18, 2011 -- we introduced readers to the revolution in the Bakken formation spanning North Dakota and portions of Montana and Canada's Saskatchewan Province. Two years may seem like the blink of an eye, but it is a veritable geological epoch in the time span of the hydraulic fracturing and horizontal drilling. If practice makes perfect, then with each well drilled proficiency is enhanced and the nation comes one step closer to energy self-sufficiency.

(click to enlarge)

The upward revision in reserves is mirrored in the production volumes. Over the 12 months ended May, U.S. oil production surpassed 2.5 billion barrels. This volume is a 15% increase over the prior fiscal year ended May 2012. It is a 21% increase over fiscal year May 2003 totals. In the past 10 years, North Dakota -- the center of the tight oil boom -- has jumped from the 11th largest U.S. oil producing region to the third. The state now eclipses California, the Alaskan North Slope, and Louisiana in the rankings. Only Texas (No. 1) and the Gulf Offshore (No. 2) surpass North Dakota's 272 million barrels pumped in the 12 months ended May 2013.

Has the revolution peaked? By no means. On the horizon we see two other unconventional hydrocarbon plays with the potential to further disrupt the OPEC establishment. The U.S. will participate in both as will other nations around the globe. One is oil shale. Now, oil shale is not to be confused with shale oil (or tight oil in the industry). It is more akin to tar sands. Unlike tar sands, no economically viable production method currently exists. Twenty years ago, the same was once true for shale oil. So, do not discount technology.

The other is methane hydrates, popularly known as "fire ice." The saying goes, necessity is the mother of invention. If so, this explains the keen interest of both Japan and South Korea in making the technological leaps needed to convert the stuff of science fiction into the energy source of tomorrow. Both countries are industrial titans lacking any indigenous energy reserves. Methane hydrates offer both the potential to sever their reliance on imported energy. Our best guess is within a generation Japan will begin mining fire ice in sufficient quantities from its continental shelf to fuel its factories, power plants, and cars.

So why the media silence? Because it does not fit the narrative supporting alternative energy. Promoters have relied on a double barreled shotgun in their arguments for wind and solar. One barrel is loaded with climate change data; the other with peak oil statistics. It appears now oil has not peaked. Conventional sources may be waning but unconventional sources are growing. With liquid hydrocarbons becoming more abundant, one impetus for subjecting the economy to a wrenching change is gone. With only one bullet left, the fear of losing the battle grows. The unfolding debate regarding the Keystone XL project will reveal just how rabid the media (and the administration's) phobia to hydrocarbons has become.

Notes on Sources, Methods and Definitions:

  • Based on production data ended May 2013, for all U.S. Petroleum Administration for Defense Districts (PADD). Volumes include lease condensates. This term describes oil existing in a gaseous state when underground but condenses to a liquid at normal atmospheric pressure.
  • The Energy Information Agency (EIA) is an arm of the U.S. Department of Energy (DoE).
  • Sources: EIA, AIFS estimates.
Source: Hydrocarbon Phobia