The U.S. is poised for a revival of domestic oil production that may mirror a surge in natural-gas output from shale formations, ConocoPhillips Chief Executive Officer Jim Mulva said.
“The revolution has spread to domestic oil production,” Mulva said in remarks prepared for a speech at Rice University in Houston today. “And it may track the path it followed with natural gas. We just don’t know yet. But it looks promising.”
During the last three years, the U.S. has reversed a decline in its oil resources, which peaked in 1970 then dropped about 50 percent by 2008, Mulva said. The industry is returning to older producing areas to find petroleum liquids in shale and other so-called tight-rock formations, he said.
Energy consultants’ estimates show such fields may produce 3 million barrels of oil a day by 2025, or five times their current production, Mulva said. Together, the U.S. and Canada may have at least 100 billion barrels of recoverable resources from tight-oil basins, he said.
A combination of hydraulic fracturing and horizontal drilling led to the increase in production from shale, Mulva said. Fracking, as fracturing is known, involves high-pressure injections of water, sand and chemicals underground to crack rock so oil and gas can flow.
The U.S. Energy Information Administration estimates the U.S. now has about 2,700 trillion cubic feet of recoverable gas, enough supplies to last more than a century, Mulva said. Now those same techniques are unlocking new oil supplies in “the biggest oil-industry breakthrough since the 1940s, when we first moved offshore into the Gulf of Mexico.”
ConocoPhillips has operations in such oil-rich reservoirs as the Eagle Ford Shale of Texas and the Bakken in North Dakota and Montana, Mulva said. The company continues to add acreage in other areas, he said.
Government must play “a constructive role” if the energy industry is to reach the full potential of North American resources, Mulva said. A balance must be struck between energy needs and protection of the environment and climate, he said.
Mulva cited TransCanada Corp.’s proposed Keystone XL pipeline, planned to carry crude from Canada’s oil sands to U.S. Gulf Coast refineries, as an example of a project that has been delayed by regulation. Canadian oil sands could be used to replace heavy crude sent to U.S. refineries from nations such as Venezuela, Mulva said.
The U.S. could use its expanding oil resources to cut its dependence on overseas imports, he said.
“An energy bonanza lies within our reach -- if we only take full advantage of the unconventional resources right beneath our feet,” he said.