Thread: Can You Guess Which Country Has the World's Largest Oil Reserves? (Hint: It's Not Sau

Can You Guess Which Country Has the World's Largest Oil Reserves? (Hint: It's Not Saudi Arabia)

The shale revolution has dramatically changed the global energy landscape.

Matthew DiLallo
(TMFmd19)

Feb 27, 2017 at 8:27AM



For decades, the oil market has been dominated by Saudi Arabia, because it not only produced the most oil on a daily basis but also controlled the most oil underground. Those oil resources, known as reserves, gave the country leverage because it could ramp its output up or down to respond to market conditions. It often used that advantage to keep oil prices at a level of its choosing by putting pressure on other members of OPEC to follow its lead.
That said, there's a new kid it town that, thanks to advances in drilling technology, now has more reserves than the Saudis. That surprising newcomer is none other than the United States of America, which, according to one estimate, has the world's largest oil reserves.


Drilling down into the numbers

According to a report by energy consultancy Rystad Energy, the U.S. holds 264 billion barrels of oil reserves, which includes oil from existing fields as well as a projection of oil from yet-to-be-discovered fields. Rounding out the top five are Russia (256 billion barrels), Saudi Arabia (212 billion), Canada (167 billion), and Iran (143 billion). Rystad found that the U.S. had already discovered 109 billion barrels of the reserves it used for its estimates.
Another of Rystad's findings was the importance of shale in fueling America's explosive growth in oil reserves, with these sources supplying 50% of the reserves. Of that amount, 60 billion barrels were in the state of Texas alone, thanks to the Eagle Ford and Permian Basin. Meanwhile, another 20 billion barrels of oil are likely underneath the state of North Dakota in its Bakken shale, according to estimates by leading developer Continental Resources(NYSE:CLR). On top of that, the country has several emerging shale plays in the Rockies and Oklahoma that are starting to become important drivers of reserve growth.


Where's all this undiscovered oil?

Another notable finding of the Rystad report is that what sets the U.S. apart from Saudi Arabia is a huge estimate for undiscovered oil supplies. In fact, if we readjust the numbers to only include oil reserves from existing fields and discoveries, the U.S. falls to second at 109 billion barrels, versus Saudi Arabia's 168 billion. These findings imply that the U.S. still has 155 billion barrels of oil just waiting to be discovered, compared with just 44 billion barrels in Saudi Arabia.
The country has several potential sources of this undiscovered oil. For example, oil companies have continued to find onshore sources such as new shale plays or extensions of existing areas. Also, there's likely plenty of oil currently hiding out in forbidden federal lands both onshore and offshore.
Shale plays in the U.S. have turned out to be the gift that keeps on giving. In the Permian Basin, for example, Pioneer Natural Resources (NYSE:PXD), which is the leading driller in the eastern portion of the play, believes that there could be as many as 160 billion barrels of oil equivalent resources in that legacy West Texas oil field. For perspective, that rivals the estimated oil reserves of Saudi Arabia's monster Ghawar field. In fact, Pioneer Natural Resources believes that its acreage position alone holds 11 billion barrels of oil equivalent resources. Meanwhile, oil producers are still discovering new sources of oil in that field. Late last year, Apache (NYSE:APA) announced the discovery of the Alpine High play in a region that its peers had largely written off. By applying advances in shale drilling to an area where the industry had historically underperformed, Apache believes it found the keys to unlocking at least 3 billion barrels of oil.
Another area where there are likely ample supplies of undiscovered oil is on federal land. According to Harrold Hamm, the founder and CEO of Continental Resources, the government's reluctance to lease federal land for drilling has been holding back exploration. Hamm said that "permitting is almost nonexistent," which is a problem the industry is hoping President Trump will address by easing regulations and opening up more federal land for drilling under his America-first energy policy.
One area Trump can't open up for new drilling quite so easily is in certain offshore regions, after his predecessor used a provision in a 1953 law to ban new leases on large swaths of federal waters for exploration, including the entire Alaskan Arctic. According to the U.S. Geological Survey, as many as 27 billion barrels of recoverable oil could be underneath the Alaskan Arctic. However, because former President Obama invoked this particular provision to ban new leases, it would probably take an act of Congress to reverse it so that President Trump or a future president can open up these areas to future drilling.


Investor takeaway

America has more recoverable oil than any other nation in the world, according to research from Rystad Energy. That said, oil companies haven't found all that oil just yet, though there's reasonable certainty that it exists, especially as producers explore around shale plays and on federal land that's currently off limits. So for the U.S. to reach its full potential as an oil superpower, President Trump will need to make good on his America-first energy pledge by cutting regulations and opening up more areas to drilling, so that oil companies can go out and find the oil. Doing so will not only further loosen Saudi control on the oil market, but it will also keep more oil dollars in the United States.
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Shale oil is not a new discovery. Shale oil has always been around, but was never considered to be economically feasible for mining. Now that we are running out of oil everywhere, shale oil has become economically feasible.

Eventually, we will run out of shale oil too. Such is the fate of all mining.

Sure, but considering that we have more oil than anyone in the world, it's about time that we stop sending our money to Saudi Arabia. We should be buying oil from American oil companies and pumped from American soil and screw the rest of the world. We need to keep that money here in the U.S., not giving it to countries who are going to use that money we give them for oil to end up giving it to terror groups to wage a jihadist war against us.

Originally Posted by 6 Million Dollar Man

Sure, but considering that we have more oil than anyone in the world, it's about time that we stop sending our money to Saudi Arabia. We should be buying oil from American oil companies and pumped from American soil and screw the rest of the world. We need to keep that money here in the U.S., not giving it to countries who are going to use that money we give them for oil to end up giving it to terror groups to wage a jihadist war against us.

Is relying solely on our own oil reserves really a smart move? When it's gone, it's gone. As long as feasible, I think we should be using other peoples oil. Unfortunately though, a lot of our refined oil is being exported. FYI: U.S. oil exports have recently hit a record high.

In December 2015, President Obama signed legislation that ended a crude oil export ban dating back to 1975.

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The Case Of Canada And The Alberta Tar Sands

Today, Canada boasts the second largest proven oil reserves in the world thanks to the tar sands industry, which was practically non-existent on a commercial scale less than two decades ago. Click here to find out how the Canadian government helped build the tar sands industry.

The oil shale resources in the United States are comparable in scope and in kind to the bituminous sands (or tar sands) found in Alberta, Canada. The deposits in Alberta contain about 85% of the world’s bitumen reserves, and it is estimated that they hold 173 billion barrels of recoverable oil.

Bitumen products currently make up nearly half of Canadian oil production; As a result o the development of this industry, today, Canada is the largest supplier of crude oil and refined products to the United States. However, the development of the industry was only possible because of the Canadian government’s commitment to its creation.

Through a series of government actions, legal steps and a variety of incentives, the Canadian authorities helped “kick-start” the tar sands industry, by providing a supportive environment that would make this industry attractive to investors.

These steps, included:

• price guarantees,
• tax incentives,
• supporting R&D,
• enabling license holders to deduct capex and r&d investments from royalties due upon commercial conversion,
• creating a clear regulatory path and reducing risks associated with uncertainties regarding regulations,
• environmental standards etc.

Processing unconventional oils is a capital-intensive process, and so oil sands and heavy oil come under development only after the more accessible, less resource-intensive sources begin to diminish.

However, because of the vast resources available in the Alberta oil sand deposits, the area has been looked to for development for almost as long as Canada has been drilling for conventional oil.

Beginning in the 1940s, a series of companies were given permission to attempt extraction from the tar sands, but with only limited success, first because technologies were not yet available to make use of the resources, then later, in the 1960s, because the Canadian government kept prices on unconventional oils artificially low.

However, by 1973, the world was in an energy crisis.

Syncrude, the largest plant in the area, was hit hard by inflation and unable to meet costs– as a result, investors withdrew, leaving the plant incapacitated.

In 1975 the Alberta government stepped in and invited the Canadian government, as well as the governments of other provinces, to participate as investors in creating a viable oil sands industry.

The federal and provincial governments together took over 30% of Syncrude, and Alberta took over ownership of the pipeline and electrical utility for the plant. The plant went into operation three years later, and now supplies 14% of Canada’s oil production.

Heavy government investment provided the high level of capital needed to succeed in a project of such scope. A similar commitment will be important if the oil shale industry in the United States is to ever be fully developed.

http://amso.net/strategic-significan...ase-of-canada/

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