Monday, July 31, 2017

An American Treasure: The Green River Basin's 3 Trillion Barrels of Shale Oil

Click here to read the original Cautious Optimism Facebook post with comments

3 MIN READ - A submission from the Cautious Optimism Correspondent at Large for Economic Affairs (and other egghead stuff)

As CO recently reported, US oil output is on track to break records going back to 1970—thanks in no small part to the shale oil/fracking revolution that hit high gear in the Bakken and Eagle Ford (and now the Permian) just a few short years ago.

So it helps to reflect on former President Obama’s policy towards America’s largest-by-far shale oil resource: the Green River Formation that traverses the remote border intersection region of Colorado, Wyoming, and Utah. While the 2005 Rand study estimated Green River oil reserves at 800 billion barrels, a more recent USGS survey places estimates at 3 trillion barrels with half technically recoverable.

And although Green River shale oil is more resistant to current extraction methods than Bakken or Permian shale, its organic kerogen can be successfully converted to oil and gas with ExxonMobil and Total working on even more efficient production methods.

But to put that formation’s potential into perspective, the fertile Permian Basin’s reserves—which are driving huge gains in US oil production—are estimated at 20 billion barrels or roughly 1.3% the Green River’s recoverable reserves. Even Saudi Arabia’s entire oil reserves are estimated at only 268 billion barrels. Yes that’s right, America’s Rocky Mountains area contains five times more recoverable oil than Saudi Arabia. In fact, 1.5 trillion barrels is roughly equal to the entire world’s proven oil reserves.

However three quarters of the formation is on federal land and for the entire eight years of the Obama administration was off limits to surveys, exploration, testing, and production.

In fact in his first two weeks in office Obama’s first Interior Secretary Ken Salazar shut the door completely on Green River Formation investigation in favor of the administration’s heavy bets on wind and solar renewables that nearly all went bankrupt.

Ironically Salazar’s counsel Steve Black defended the administration’s shutdown of shale oil exploration on federal lands because...

“It’s an industry that is not ready for prime time”

...right on the cusp of the shale oil revolution.

Meanwhile Obama bet huge money on the alternative he lauded as ready for prime time—green energy—that went bust, taking tens of billions of tax dollars with it. 

Could they all have played their cards any worse?

CO’s linked Investor’s Daily article criticizes former President Obama for mocking calls for greater US oil production and his counterclaim that...

 “...the American people aren’t stupid.” 

With shale oil set to break near 50-year US output records a few years later who looks stupid now?

The new Trump administration has shown it is much more open to leveraging all of America’s energy resources. Hopefully that includes allowing the industry to investigate the Green River Formation’s potential for development.

Read about Salazar's shutdown of the Green River Basin at

For a technical slideshow on America's shale oil go to...

Friday, July 28, 2017

Paul Krugman: California is Beating Texas' "Lone Star Stumble"

2 MIN READ - CO is pleased to introduce the newest addition to the growing embarrassment of riches that is the roster of Cautious Optimism Contributing commentators. Herein (in the header text, not the link) is the inaugural installment from the journal of the Cautious Optimism Correspondent at Large for Economic Affairs (and other egghead stuff)

As CO recently posted, Texas’ economy boomed in the first quarter with 3.9% GDP growth as California “flatlined” at 0.1%. So does anyone remember this recent doozy from New Keynesian economist Paul Krugman? ("Lone Star Stumble")

The uber-smug Nobel Laureate/New York Times columnist pronounced in 2015 that Texas was entering a long-term slump while California had transitioned from comeback to prosperity.

As evidence he cited California’s budget in surplus (after years of chronic deficits), a surplus that turned out to be only a mirage of rosy projections—based on the 2013 top income tax hike to a US-highest 13.3%—as Jerry Brown is now warning of a return to $1.6 billion deficits next year.

Krugman also cited “employment growth in Texas dropping well below the national average.” Now that’s a funny twisting of statistics. Yes, it’s harder to post rapid job percentage gains when you’re already at full employment—as opposed to when your economy is still mired in high unemployment.

Anyway this became his condemnation of “reverse Robin-Hood economics” and he asked “Will anyone on the right take heed? Probably not… …Still, the spectacle of the Texas economy coming back to earth, and Kansas sliding over the edge should at the very least make right-wing bombast ring hollow.”

Well a mere two years later Texas is still booming (not that it ever stopped) with 3.9% GDP growth, no income tax, and routine balanced budgets with a much higher bond rating than California—even with $46 a barrel oil—while California limps along at 0.1% GDP growth and returns to deficits even with the highest taxes in the nation. So we should pose Krugman’s own question back to him: “Will anyone on the left take heed? Probably not…”

But anyone who lives in Texas knew his entire premise was sheer nonsense--a fiction meant solely for the digestion of his readers who never leave New York City or San Francisco.