The events in recent weeks have caused us to focus on the oil supply and the prices which keep changing every time something happens in the Middle East. Events such as demonstrations in several Arab countries and the earthquake and Tsunami in Japan all have an impact on the availability of oil supplies. This is only natural for this kind of focus to take place with potential impact to the quantity of oil that may be available for purchase. While I am not discounting these events and their impact, there needs to some action taken to minimize this concern. The question is what can be done, if anything, from our perspective to reduce our dependency on imported oil or on energy produced by oil all together.
Our country is blessed with many options for energy resources, some of which are not being utilized to their fullest potential. Granted there are issues in some areas associated with environmental impact, but there are areas and options where the environmental impact can be reduced and yet provide the necessary energy we need to sustain our way of life.
One such example involves an area known as the Bakken formation. It is comprised of a rock formation about 200,000 square miles and is a subsurface of the Williston Basin. There are probably not many individuals who have heard of this area within our country but they should know about it and how it can play a part in our energy independence. The states and involved in this area include parts of Montana, North Dakota, South Dakota and also the region of Saskatchewan in Canada.
One big point to make about this area is that oil was discovered within the Bakken formation in 1951, but the efforts or willingness to tap this resource was not economically feasible at this point in time given the price of oil at the time. Times have changed.
New technology in rock fracturing has created a boom in the Bakken formation in reference to the available oil reserves. Oil production in this area has been active since 2007. By the end of 2010, it was estimated that oil production had reached 458,000 barrels per day, outstripping the capacity to ship oil out of the Bakken. The amount of reserves estimated in this area range from 4.3 billion barrels to over 500 billion barrels. The United States Geological Survey in their latest estimates believes there is 4.3 billion barrels of oil in the region.
The estimation of over 500 billion barrels of oil has been questioned as to the methods used to arrive at this figure. One person who arrived at the figure of over 500 billion barrels of oil was a geochemist named Leigh Price, but he died in 2000 before his calculations could be validated and published. Other estimations have other numbers ranging to as much as 300 billion barrels as late as 2006. The use of computer models has been involved in the later estimates. While the calculations of Price were questioned at the time, it appears with later figures that his figures may not have been that far off. The methods in estimating the amount of oil in this region and the wide disparity of the quantity raise questions as to how such estimates are achieved.
Other factors involving the quantity of oil in this region are reports and estimates created by states within the Bakken region such as Montana and the Dakotas. Along with the oil reserves, there is also a large quantity of natural gas supply within the region. Estimates identified in 2008 through a Homeland Security newsletter places the quantity of gas reserves at 1.85 trillion cubic feet and 148 million barrels of natural gas liquids. Information on just one government website (North Dakota) indicates there is activity regarding not only oil production but natural gas with a number of projects involved with establishing pipelines to retrieve gas supplies.
The figures and information presented above point to the fact that there is no disagreement as to the availability of oil and gas in this region of our country. The difference comes from the estimates of how much is located within the region. Another factor involved with this region is the question of where the retrieved oil is being shipped and who is using it. If the quantities of oil and gas in this region are what the highest estimates suggest, we as a country should be accessing this supply more readily and increasing the number of oil refineries to accommodate the quantity of oil available from the region. This would aid in our efforts to be more energy independent. It may also have an impact on the overall price of oil with regards to more competition. In terms of the quantity of oil we import as a country it totals to about 10 million barrels a day.
The economic impact of such reserves can only have a positive effect on our trade balance and available funds to help reduce the debt we have accumulated in recent years. It is also important to point out that these reserves have been known since 1951, but there has not been much news about the area or the amount of oil production that has taken place especially since 2007 for which figures are available. In addition, the law of supply and demand would kick in with increased supply and increased competition. Typically competition will have a positive effect of the price of goods and services. A downturn in the price we pay for oil would also provide a boom for us as individuals and for businesses.
Businesses today have high costs associated with the price of oil and if that price becomes less, business will have increased profits. In addition, individuals would have more money to spend for goods and services they need and want. The result of this scenario would be greater demand causing the need to increase the capacity to satisfy that need. This would potentially increase the opportunity for jobs with the increased demand for products and services. Additional benefit would be more income for local, state and federal governments in terms of tax revenue. The additional revenue would mean lowering the demand to borrow money and make our economy more stable in terms of paying our debts.
One last point to make involves the fact that the knowledge of the reserves in this region spans several presidential administrations. While in the past, there may have been reasons associated with the economic feasibility of retrieving these reserves but those reasons have been drastically altered or reduced with the present price of oil today. There is presently activity to tap these reserves, both the oil and gas, as can be seen in the number of oil rigs in use today and increasing each year. There are also projects with regards to pipelines being built to tap into the gas reserves in the area.
In reference to the huge amount of oil and gas reserves in the Bakken formation, a question needs to be asked. Where has the news coverage of this huge amount of oil and gas reserves been, especially in recent years when oil production has been increasing each year? The main point or focus of this article is to inform the general public of these reserves. It is not meant to point the blame at any one individual or organization. In regards to the level of oil production in the region, not having the capacity to ship the quantities from the region is a good problem to have. The capacity to move the quantity of oil production being generated must be increased. It is great that we as a country have the amount of reserves identified in this article and we should wonder if there might also be other reserves not yet discovered or utilized. We must find out if there are. Many jobs have been lost in the last few years and utilizing our resources would be a boom not only to our economic situation but also to the capability to reduce our debt.
