As it turns out, U.S. crude oil production is averaging 6.2 million barrels per day (mbpd) so far this year compared to Saudi Arabia's 9.9 mbpd. So, how did the reporter and his sources end up with a production number of 10.9 mbpd for the United States?
The problem results from the deceptive redefinition of oil supply by the oil industry itself, one designed to obscure the true oil supply picture and one that, unfortunately, has been adopted by some government agencies. Within the last decade the industry began to count something called natural gas plant liquids (NGPL) as part of oil supply. Here's how I've explained NGPL previously:
NGPL are hydrocarbons other than methane that are separated from raw natural gas at a processing plant. They include ethane, propane, butane and pentane. The amounts vary. For example, raw natural gas extracted off the coast of Malaysia contains 11 percent ethane, 5 percent propane, 2 percent butane and about 2 percent of something called natural gasoline or drip gas, a low-octane fuel that is used today primarily as a solvent. Raw natural gas from the North Slope of Alaska contains a higher percentage of methane and correspondingly smaller percentages of ethane (7 percent), propane (4 percent), butane (1 percent) and other components including carbon dioxide and pentanes (2 percent). In these two cases you can see that ethane makes up about half of the NGPL, propane makes up about a quarter, butane makes up 10 percent of Malaysian NGPL and 7 percent of Alaskan slope NGPL.
As you will note, these products all come from natural gas, not oil. While it is true that propane and butane are used as vehicle fuel in a very limited way, most of the volume of NGPL cannot easily be used as a substitute for oil. And, it is doubtful that either propane or butane could become major vehicle fuels since they make up only a small fraction of natural gas and are limited in their supply by the amount of natural gas extracted. Some NGPL are used as feedstocks for chemical production, just as petroleum is. But the likelihood that NGPL would significantly displace oil in this market as it is currently configured is small.
Also included in the definition of oil supply are biofuels, namely ethanol and biodiesel. While these are direct substitutes for oil, they make up only a small fraction of total liquid fuel, about 1.9 mbpd as of 2010 in a world that consumed 86.8 mbpd of all liquid fuels the same year. In the United States biofuels production reached 0.9 mbpd in 2010. But, there is little reason to believe biofuels will be able to substitute in a big way for oil-derived transportation fuels. Here's how I've described the situation previously:
As for biofuels, America is already approaching the current limit of its ability to absorb the supply of ethanol. Most cars can only run with a 10 percent mixture. Above that engine parts in the vast majority of vehicles start to degrade. Of course, we could continue to increase the ability of automobiles to burn ethanol. But the scale problem is the deciding factor. In North America it would take 1.8 billion acres to grow enough corn to supply enough ethanol to run the North American vehicle fleet. That's four and one-half times the amount of arable land available. And besides, corn ethanol takes more energy to produce than it provides. It's not an energy source so much as an energy carrier. Similar limitations apply to biodiesel which is made from vegetable oil.
If biofuels or NGPL were good substitutes for petroleum-derived liquid fuels, the United States would not still depend on petroleum for 93 percent of its transportation fuel. And, keep in mind that copious amounts of petroleum are needed to grow the crops used to make biofuels. Petroleum products run the farm machinery, are used as feedstocks to make the herbicides and pesticides sprayed on the crops, and power the vehicles that transport those crops to the refinery. Natural gas and coal are typically used to power biofuel refinery operations. And so, biofuels might better be described as a way to transform fossil fuel energy into liquid fuels using crop materials as a medium.
So, what is the real situation in the United States, if it is not as the reporter and his sources describe? First, recognize that the EIA defines crude oil production as "crude oil including lease condensate." Lease condensates are very light hydrocarbons that turn from gases into liquids when released from the pressure of an underground reservoir and are "recovered as a liquid from natural gas wells in lease or field separation facilities and later mixed into the crude stream (my emphasis)." The importance here is that these are the only liquids from natural gas wells that become part of the crude oil supply. NGPL, on the other hand, are separated at natural gas processing plants and therefore do not become part of the crude oil stream.
Production of crude oil including lease condensate has, in fact, been growing in the United States. The key fact, however, is that U.S. production only just recovered last year to levels not seen since before 2005 when Hurricane Katrina badly damaged many offshore oil production facilities in the Gulf of Mexico. This year production has grown further to an average of 6.2 mbpd through June. But that's a far cry from the 10.9 mbpd quoted in the article which includes NGPL, biofuels and something called refinery processing gain--which is the result of the well-known fact that the total volume of products made from crude oil such as gasoline, diesel and kerosene always exceeds the original volume of the crude oil used--hardly something to write home about.
The EIA projects that production of U.S. crude oil (using the proper definition) will rise to 6.7 mbpd by 2020 and begin a gradual decline thereafter. It's certainly possible that the EIA projection is too conservative. But it is worth keeping in mind that U.S. consumption of finished petroleum products this year has averaged 14.1 mbpd. U.S. oil production would have to more than double to meet U.S. needs.
In two previous pieces--"The Oil Industry's Deceitful Promise of American Energy Independence" and "Oil and Gas Industry Uses Deceptive Energy Independence Message to Push U.S. Exports"--I explained why the oil industry wants Americans to believe that we are in the midst of an oil boom that will somehow free us from imports and bring declining average prices for petroleum products. But continuing high prices for crude oil and petroleum products across the world demonstrate that small gains in American production are no match for worldwide depletion which has kept crude oil production range bound between about 72 and 74 mbpd from 2005 through 2011. One should keep in mind that oil is a worldwide commodity that can always be shipped to the highest bidder. So, it is worldwide supply and demand that ultimately determine prices (once transportation costs are taken into account).
The media have become unwitting accomplishes in an oil industry propaganda machine that seeks to soften up the American public for an orgy of drilling--one that will only drain America's limited oil resources more quickly while achieving neither energy independence, nor lower prices, nor an urgently needed transition away from finite petroleum, a transition that would free us from the tyranny of oil and the companies that control it.
Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he writes columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin, The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at email@example.com.