Measuring America’s Energy Potential
By Interior Deputy Secretary David J. Hayes
Following the release of a scientific assessment of global undiscovered, technically recoverable oil and gas resources by the U.S. Geological Survey, some have attempted to compare these assessments to facts regarding U.S. oil reserves – claiming that one contradicts the other. This comparison confuses two very distinct concepts, each measuring a different set of facts.
Resources and reserves are both important measurements, but they are apples and oranges:
1. Put simply, reserves are accumulations of oil or gas that have been discovered, are well-defined, and are considered economically viable under existing economic conditions. They are the universally accepted immediate indicator of economically viable oil and gas production potential for the United States and countries around the world. According to the EIA, the location, quantity and grade of the energy source are usually considered to be well established in such reserves.
In other words, reserves are like cash in your bank account. You know how much is in there, and you know you can easily access it. In fact, before reporting reserves to their investors, companies must first disclose them to the Securities and Exchange Commission and prove to a high degree of confidence that the reserves are recoverable under existing economic conditions, using current technology.
2. Yesterday’s USGS scientific assessment is only focused on potential resources that have not yet been discovered. They represent our best estimate of the potential quantities of undiscovered oil and gas that could be technically producible using currently available technology and industry practices – regardless of economic or accessibility considerations. This study does not take into account any other factors such as whether or not a company might find it financially prudent to explore or develop.
In other words, undiscovered, technically recoverable resources are more like your long-term future earning potential – they estimate the potential oil and gas resources that might be in the ground, without knowing for certain. The resource assessments of U.S. energy supplies conducted by USGS continue to be encouraging; but undiscovered, technically recoverable resources often take many years, if not decades, to develop.
It’s also important to note that the U.S. Geological Survey has produced a World Petroleum Assessment before, most recently in 2000. Yesterday’s announcement represents a reassessment of the world since the last assessment, but it does not contain wholly unknown information. Likewise, the USGS is continuously assessing American domestic resources. More information is available here. Information on resource assessments for the U.S. Outer Continental Shelf, developed by the Bureau of Ocean Energy Management, is available here.
The Obama Administration is committed to developing every source of American energy – to take full advantage of our rich resources – whether oil or gas, solar or wind, American innovation or American ingenuity. This will help us create jobs for Americans, and help us create an economy built to last.
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