Thursday, April 3, 2014

Predicting Future oil production in the US

I think this article discusses a very important issue, considering  the current  Russia/Ukraine conflict and the possible effects of US involvement.

" When Representative Ed Royce, a California Republican, said at a March 26 hearing in Washington that the U.S. should start exporting its oil to undermine Russian influence, his forecast of “increasing U.S. energy production” can be traced back to Arps."

"Rising reserve estimates gives the U.S. a false sense of security, said Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin."
“We have deceived ourselves into thinking that since we have an infinite resource, we don’t need to worry,” Patzek said. “We are stumbling like blind people into a future which is not as pretty as we think.”


Do you think the US should continue increasing its energy production for national security reasons? (If Russia cuts off their energy supply to the US when they get into a conflict?)  Do you think this Arps method of predicting oil production is reliable? What other thoughts do you have on this issue?


7 comments:

  1. Overall, I think that investing in alternative energy sources and becoming more energy independent would be a very positive development for both economic and political reasons. That we may be overestimating our reserves with this Arps methodology, to me, emphasizes the need to look for other sources of energy. I think achieving greater energy autonomy would weaken one of Putin's political weapons, though I am curious how he would respond. I imagine he can predict the effects of Western energy autonomy on his political weapons, so perhaps he is trying to look East to make countries like China dependent on Russia's oil. I then wonder how this might interact with Obama's attempt to "pivot to the East."

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  2. As someone who has studied the history of the oil industry, I have discovered that it was and is very common for scientists to UNDERESTIMATE, not overestimate, the the amount of oil reserves available. Back in the 1950s, scientists estimated that we would run out of oil in 1970s and yet, we are in the 2010s and the number of discovered oil reserves continue to grow today.

    As for investing in alternative energy sources, I believe the best way to do that is by allowing the free market to do the magic. When the supply of an energy source declines, the price increases, which encourages energy producers and consumers to seek cheaper forms of energy. In the 1800s, the coal-based economy transitioned into an oil-based economy after oil was found to be cheaper. Today, a similar event is occurring with oil become more expensive, which is encouraging people to seek cheaper sources, such as natural gas and nuclear.

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  3. I don't think the Arps method is a reliable predictor since it's an outdated model. The reality is that we are running out of oil rapidly and we need to move aggressively towards more economically and environmentally sustainable energy sources such as solar. With respect to the latter, I'm very optimistic that we'll be able to meet much of our energy needs with solar energy within a decade.

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  5. If we carefully analyze the use of fossil fuels in the last century, then we can see a pattern. Use of coal as a major source of energy peaked during the period of 1920's-50's. With advanced technology, people started using petroleum and natural gas slowly and the use of petroleum peaked during the 70's. Currently natural gas is about to reach its peak level. Thus, the major source of energy has been changing throughout the century, and there were concerns about the abundance of respective fossil fuel every time it peaked. If we follow the historical pattern, then market will come up with a solution for the next energy source. Current progress regarding environmentally sustainable energy source suggests the major source in the future will probably in form of solar energy. But I don't think we will stop there, questions will be raised regarding the efficiency and there will be concerns for a better energy source again. Based on history, it appears to be a cycle, where market comes with new form to substitute the old major source of energy.

    The overall benefit of increased national security, from being energy independent is worth the current investments. Hence, US has an incentive to make investments in the research and development of the next energy source.

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  6. It makes sense to increase oil production in the USA. It would provide more national security and welfare. It would be nice if these oil reserves are bountiful. Ideally, we can move towards using alternative fuel sorces that are more sustainable long-term. Regardless, oili will undoubtedly be in high demand in the USA in the near future. The more energy independent the USA becomes, the betterr. It makes sense to increase oil production in the USA.

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  7. Like the other posters, I believe becoming more energy independent would have significant political and economic benefits. With regard to alternative energy, I believe the market will make the shift when it is economically efficient (as Tyler pointed out, the same thing happened when oil became cheaper than coal). As others have pointed out, alternative methods, such as solar energy, exist, and the market will shift over to these methods when they become more cost-efficient than oil.

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