US overtakes Saudi Arabia to have largest recoverable oil reserves

21 June 2018

The US has once again overtaken Saudi Arabia to become the world’s largest holder of recoverable oil reserves, thanks to the utilization of previously disused shale and tight oil fields. According to data from research consultancy Rystad Energy, the US now has 310 billion barrels of recoverable oil, while Saudi Arabia has 281 billion.

Hydraulic fracturing, or ‘fracking’ as it is affectionately called in the media, isn’t a new invention. The oil and gas extraction method – which involves pumping water, chemicals, and sand under high pressure to break open pathways in rock holding the oil and gas – was first commercially used in 1949. Over the past decade, the method began to be applied to horizontal wells, opening up previously unreached reserves in the country’s many shale rock formations.

The widespread adoption of fracking in the US has opened up billions of barrel of oil and trillions of cubic feet of natural gas, reshaping the oil market. According to the International Energy Agency, rising prices and demand from Asia will cause the US to increase its output from these reserves. The growth in US oil production is forecasted to cover 80% of new global demand for oil over the next three years – with much of it coming from oil produced via fracking in the West Texas Permian shale formation.

Now, a new report from research consultancy Rystad Energy reveals that the US has again overtaken Saudi Arabia as the world’s largest holder of recoverable oil. Rystad is a Norway-based firm that provides research data, analysis, and consulting services to the global energy industry. According to the Rystad report, the US added close to 50 billion barrels of oil last year, and now holds an estimated 310 billion barrels of recoverable oil – an amount equal to 79 years of US oil output at current levels.

The huge increase in estimated recoverable oil in the US is predictably linked to the doubling of fracking operations in the Permian Basin. According to the firm’s data, Texas now holds more than 100 billion barrels of recoverable oil – 90% coming from shale or other rock formations requiring fracking to extract it.

Recoverable oil by resource category

In contrast to the 47 billion added barrels of recoverable oil in the US, Saudi Arabia only added 4 billion, bringing its total recoverable reserves to 281 billion barrels – good for second place. Third-place Russia added 8 billion barrels bringing its total to 190 billion, while fourth-place Canada added 6 billion barrels, giving it a total of 164 billion barrels of recoverable oil. No country added close to the amount of recoverable oil last year that the US did.

The above estimates for recoverable oil are based on analysis from Rystad that projects the likely production for future discoveries. About 300 billion barrels of shales oil are as yet undiscovered globally, with 78% in non-OPEC countries.

In terms of already discovered oil, Saudi Arabia is well ahead of other countries, with 246 billion barrels of oil – 91 billion more than 155 billion held by the US. Saudi Arabia is also top by the strict definition of commercially proven reserves, with 88 billion barrels. Russia is second with 50 billion, while the US ranks third with 37 billion barrels of commercially proven reserves. The conservative metric estimates 388 billion barrels of oil globally – about 13 years of oil production.

Recoverable oil by field type

As can be seen above, most of the US’ recoverable reserves take the form of shale/tight oil. Saudi Arabia, on the other hand, has a high degree of easily accessible onshore oil, which can be extracted more cheaply than shale oil. Russia also has mostly traditional onshore oil reserves. However, Russia and Canada both have significant shale oil reserves which are likely to grow in the future, if oil prices remain stable. The Montney and Duvernay shale fields in northern Canada are currently attracting a high degree of interest from energy firms – who are conducting an increasing amount of geological surveys to uncover more reserves. 

As well, it’s apparent from the chart that Canada and Venezuela’s reserves are heavily based on oil sands, which is the most expensive extraction method. The process requires an expensive and energy intensive refining process to separate the bitumen from minerals and sand. Canada is likely shift more production to the less expensive shale fracking process in the coming years.

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Tony Planos and Barry Dull join Maine Pointe's Oil & Gas practice

16 January 2019

Maine Pointe, a firm that specialises in supply chain and operations consultancy, has added two senior oil & gas industry experts to its ranks in the US. Tony Planos and Barry Dull bring over 45 years of combined experience to the Boston headquartered advisory firm. 

Tony Planos has more than 25 years of management consulting experience under his belt, during which he has worked with some of the world's largest oil and gas companies, North American onshore and offshore upstream operators, and oil and gas refining and marketing companies.

Prior to joining Maine Pointe, Planos was Senior Vice President at Synagro, a provider of systems for meeting environmental regulations, and worked over seven years for Evolve, a boutique operations consulting firm based in Houston, serving the upstream oil & gas market. Earlier in his career, Planos served among others Latin American-origin IT consultancy GBM, and global consulting firms Sapient, KPMG and Capgemini Consulting. “Tony's leadership and experience will allow us to continue strengthening our oil and gas team and delivering sustainable EBITDA improvements to our clients in this sector,” said David Jadwin, a leader at Maine Pointe. 

Barry Dull brings a deep technical background in the oil & gas industry, as well as sales & business development experience to the firm. The past five years, Dull worked as an independent Sales Business Development Consultant, serving clients in the energy and oil & gas sectors. Previously, he spent nearly two decades at IBM, latterly in the role of Sales Client Executive. At the technology giant, Dull directed IBM’s sales strategy to oil & gas, chemical and petroleum companies, established and coordinated client relationship with senior executives and facilitated the firm’s upstream/downstream solutions, services and solutions for clients. Dull started his career with Experian and steel produce U.S. Steel Corporation.

Tony Planos and Barry Dull join Maine Pointe's Oil & Gas practiceJadwin: “Barry's passion for the oil and gas industry as well as his extensive experience and technical background will be key in bringing unparalleled success to our clients.”

The appointments comes at a time when Maine Pointe is seeing growing demand for its services from oil & gas clients. According to the latest data available, spending by oil & gas companies in the US on external consultancy services amounted to between $6 and $9 billion – a 10% to 15% share of US’s roughly $60 billion management consulting industry. The bulk of oil & gas spending is in the areas of value optimization strategies and ways of working, supply chain and operations – areas which belong to Maine Pointe’s sweet spot. 

“The growing complexity of this sector coupled with increasing uncertainty and swings in crude pricing, means that industry executives are facing complex operational challenges: from a growing need for supply chain integration, logistic constraints and an ocean of data to be analyzed to accelerating technology developments in improving the safe extraction and processing of hydrocarbons,” explained Jadwin, who has been with Maine Pointe since 2015, having previously served operational consultancies The Highland Group and Alexander Proudfoot for 20+ years.

Alongside its US office in Boston, Maine Pointe also has hubs in Canada, Europe (Switzerland) and Asia (China). Other sectors the firm serves include aerospace, defense, consumer goods, food & beverage, automotive, industrial products and private equity. “Our Total Value Optimization approach [the firm’s proprietary methodology for value creation along the buy-make-move-fulfill supply chain] enables us to help companies achieve sustainable growth at lower costs to the business.” 

Related: Maine Pointe's CEO Steve Bowen on supply chain priorities in 2019.