The Quest - By Daniel Yergin Page 0,121

to more than 400,000 in 2010. In another several years it could be 800,000 barrels per day or even more.27

The technique is spreading. Formations similar to the Bakken, with such names as the Eagle Ford in Texas, and Bone Springs in New Mexico, and Three Forks in North Dakota, are becoming hot spots for exploration.

Although still in the early days of tight oil, initial estimates suggest that there might be as much as 20 billion barrels of recoverable tight oil just in the United States. That is like adding one and a half brand-new Alaska North Slopes, without having to go to work in the Arctic north and without having to build a huge new pipeline. Such reserves could potentially be reaching two million barrels per day of additional production in the United States by 2020 that was not even anticipated even half a decade ago. Although there is hardly any calculation of the tight oil resources in the rest of the world, the numbers are likely to be substantial.

What all the unconventional resources have in common is that they are not the traditionally produced onshore flowing oil that has been the industry staple since Colonel Drake drilled his well in Titusville in1859. And they are all expanding the definition of oil to help meet growing global demand. By 2030 these nontraditional liquids could add up to a third of total liquids capacity. By then, however, most of these unconventional oils will have a new name. They will all be called conventional.28

UNCONVENTIONALS: THE NEW GEOGRAPHY OF OIL AND GAS

Technology is unlocking what were previously unavailable energy resources.

Source: IHS CERA

13

THE SECURITY OF ENERGY

Energy security may seem like an abstract concern—certainly important, yet vague, a little hard to pin down. But disruption and turmoil—and the evident risks—demonstrate both its tangibility and how fundamental it is to modern life. Without oil there is virtually no mobility, and without electricity—and energy to generate that electricity—there would be no Internet age.

But the dependence on energy systems, and their growing complexity and reach, all underline the need to understand the risks and requirements of energy security in the twenty-first century. Increasingly, energy trade traverses national borders. Moreover, energy security is not just about countering the wide variety of threats; it is also about the relations among nations, how they interact with each other, and how energy impacts their overall national security.

The interdependence of energy has been a fact of international life for centuries. Beginning in the sixteenth century, the boom in the need for wood—used for shipbuilding and construction but, most important, for domestic heating—led to the integration of Norway and Sweden, and then North America to some degree, into the European economy.1

But the point at which energy security became a decisive factor in international relations was a century ago, in the years just preceding the First World War. In 1911 Winston Churchill, then First Lord of the Admiralty, made the historic decision, in his words, to base Britain’s “naval supremacy upon oil—that is, to convert the battleships of the Royal Navy from coal to oil.” Oil would make the ships of the Royal Navy faster and more flexible than those of Germany’s growing navy, giving Britain a critical advantage in the Anglo-German naval race. As Churchill summed it up, switching to oil meant “more gun-power and more speed for less size or cost.”2

But the move to oil created a new challenge: a daunting problem of supply. While the U.S. Navy was behind the Royal Navy in considering the move from coal to oil for its battleships, it at least could call on large domestic supplies. Britain had no such resources. Conversion meant that the Royal Navy would rely not on coal from Wales, safely within Britain’s own borders, but rather on insecure oil supplies that were six thousand miles away by sea—in Persia, now Iran.

Critics argued at the time that it would be dangerous and foolhardy for the Royal Navy to be dependent upon the risky and insecure nation of Persia—what one official called “an old, long-mismanaged estate, ready to be knocked down.” That was hardly a country on which to rely for a nation’s most vital strategic resource.

Churchill responded with what would become a fundamental touchstone of energy security: diversification of supply. “On no one quality, on no one process, on no one country, on no one route, and on no one field must we be dependent,” he told Parliament in July 1913. “Safety and certainty in oil lie in variety and variety alone.”