In 2012, U.S. oil production rose by 790,000 barrels per day, the biggest annual increase since U.S. oil production began in 1859. In 2013, the Energy Information Administration expects production to rise yet again, by 815,000 barrels per day, which would set another record. Domestic natural gas production is also at record levels.
What has allowed such dramatic production increases? Innovation in the drilling sector. The convergence of a myriad of technologies—ranging from better drill bits and seismic data to robotic rigs and high-performance pumps—is allowing the oil and gas sector to produce staggering quantities of energy from locations that were once thought to be inaccessible or bereft of hydrocarbons.
The dominance of oil and gas in our fuel mix will continue. The massive scale of the global drilling sector, combined with its technological prowess, gives us every reason to believe that we will have cheap, abundant, reliable supplies of oil and gas for many years to come.
The key findings of this paper include:
- Between 1949 and 2010, thanks to improved technology, oil and gas drillers reduced the number of dry holes drilled from 34 percent to 11 percent.
- Global spending on oil and gas exploration dwarfs what is spent on "clean" energy. In 2012 alone, drilling expenditures were about $1.2 trillion, nearly 4.5 times the amount spent on alternative energy projects.
- Despite more than a century of claims that the world is running out of oil and gas, estimates of available resources continue rising because of innovation. In 2009, the International Energy Agency more than doubled its prior-year estimate of global gas resources, to some 30,000 trillion cubic feetâ€”enough gas to last for nearly three centuries at current rates of consumption.
- In 1980, the world had about 683 billion barrels of proved reserves. Between 1980 and 2011, residents of the planet consumed about 800 billion barrels of oil. Yet in 2011, global proved oil reserves stood at 1.6 trillion barrels, an increase of 130 percent over the level recorded in 1980.
- The dramatic increase in oil and gas resources is the result of a century of improvements to older technologies such as drill rigs and drill bits, along with better seismic tools, advances in materials science, better robots, more capable submarines, and, of course, cheaper computing power.