“This is the largest estimate of continuous oil that USGS has ever assessed in the United States.”
That was the headline of the press release issued on Nov. 15 by the U.S. Geological Survey.
It refers to the estimated 20 billion barrels of oil contained in the Wolfcamp shale in the western Texas Permian Basin region.
Walter Guidroz, program coordinator for the USGS Energy Resources Program, is optimistic about the news. “The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more.”
However, as the USGS adds: “Whether or not it is profitable to produce these resources has not been evaluated.”
An opinion piece in Forbes casts doubt on the profitability of the discovery, claiming that the valuation of $900 billion is “horribly wrong.” As industry analyst Tom Worstall explains, the figure of $900 billion is simply the market price of oil multiplied by the volume. However, he notes, there are huge costs involved in actually getting the oil out of the ground. He concludes that the actual value “could be anything from $899 billion to nothing, possibly even negative.”
Some observers think it’s best just to leave it in the ground. As the USGS notes, the oil at Wolfcamp will require extensive use of “fracking” -- the highly controversial method in which chemically-laden water and sand is injected at high pressures into the ground. It has allegedly led to contamination of water supplies and an increase in earthquakes, according to Ecowatch.
"This announcement is bad news on three fronts," said Alan Septoff of Earthworks, which describes itself as “a nonprofit organization dedicated to protecting communities and the environment from the adverse impacts of mineral and energy development while promoting sustainable solutions.”
He says it endangers nearby Balmorhea Springs, one of the state's great natural resources, which is fed by groundwater that is contaminated by fracking. He also contends that oil reserves cannot be extracted without contributing to climate change. And finally, he thinks it will contribute to an “economic boom bust cycle” which will benefit shareholders but harm the community at large.