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What is shale oil

Shale oil is a fine-grained sedimentary rock that contains significant amounts of a hydrocarbon called “kerogen.” When heated and processed, kerogen becomes a light liquid hydrocarbon called “shale oil.” We can refine shale oil into gasoline, diesel, jet fuels, and other valuable petroleum products.

shale oil

The United States Geological Survey (USGS) estimates that over 1.5 trillion barrels of oil are locked in the shale deposits of Colorado, Utah and Wyoming. By comparison, Saudi Arabia has about 265 billion barrels of proven crude oil reserves. Watch the video for more information:

Technology will be the key to creating a sustainable commercial shale oil industry in the United States. Dozens of companies, universities, national laboratories, and public agencies are now researching various methods of extracting this massive resource.

If the United States can develop even a fraction of its shale oil resources – in an economical and environmentally responsible manner – economies, governments, and energy markets around the World will change radically.

However, we should only develop this resource if it can be done in a manner that environmentally and socially responsible.

Shale Oil in the US – oil Production

The increase in the US oil production has shaken the OPEC countries. This year US became the biggest oil producer after it overtook the oil producing giants like Saudi Arabia and Russia. This increase in production is due to the increase in extraction of energy from shale rock. This has also resulted in huge recovery in the US economy.

United States of America becomes the Leader in oil production – The production of crude oil and also that of liquids which are separated from the natural gas was noted to be the highest in the US. As per the results of the first quarter, the daily production of the US was noted to be at 11 million barrels per day. The US was for the first time declared as the world leader in natural gas production in 2010. This declaration was made by the International Energy Agency in June that year. This increase in the supply capacity of the US has some very deep and significant impacts on not just the US but on the world economy. This increase in shale production has given the US economy a new lease of life. Had it not been for this oil supply, the petroleum price in the US would have increased to such an extent that they would have become completely unaffordable.

Reasons for reduced oil prices – Formations in Texas and North Dakota are the key reason for the increased oil extraction capacity of the US. Here the companies make use of high pressure liquids in order to split the rocks. This process of splitting the rocks using high pressure liquids is known as hydraulic fracturing or fracking. All this production has increased the supply of oil in the market. Along with this increased supply the US government has imposed several restrictions on the export of this produce. This has led to a fall in the oil prices. However, in spite of this increased supply and falling prices, the import of oil by the US still happens. According to the Department of Energy’s statistical wing, US continues to import 7.5% billion barrels of oil every day.

US oil production supremacy – IEA, which is a Paris based advisor to 29 countries all over the world, by 2019 the oil production of the US will be as high as 13.1 billion barrels per day and thereafter it shall become stagnant. With these statistics, it is believed that the US will continue to hold on to its number one position till 2030 after which its decline will start. While the oil production is increasing in the US, other countries are not able to show any signs of growth in their production capacity. This has resulted in the oil prices in the rest of the world remaining at a high level.

US and Islamic Oil producing countries – With the increase in the level of oil supply, one would have expected that this increase in supply will have a big effect on the oil prices. But no such impact has been observed. This is mainly due to the fact that while on one side the US has increased its oil supply, supply of oil by the Islamic states has come under many constraints. These constraints include threats from terrorist groups which claim to cause some serious damage to the second largest oil producer in the OPEC group, which is Iraq. Similarly, supply from Nigeria has also been affected due to oil theft and sabotage. The protests in Libya too, have caused some serious damage to the demand and supply equation in the world with regard to oil.

While the world is grappling with the consequences of these hindrances in the oil supply by the Islamic states, the US is quite comfortable with its constant growth and increase in oil shale production. The increase in oil production has led to growth in the US economy, which has in turn resulted in an increase of the wage rate across the country. Thus, thanks to the growth in the US oil production, its dominance over the world shall continue for a long time.