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01 / 05
More Oil or More Knowledge?

Blog Post | Energy Production

More Oil or More Knowledge?

America enjoys a virtuous circle as more knowledge gives us more oil and more oil gives us more knowledge.

Summary: The discovery of refining oil into valuable products transformed crude oil from a liability to a critical resource. Since the first successful oil drilling in 1859, global oil reserves have continued to increase. Technological advancements such as hydraulic fracturing and horizontal drilling have helped make the United States the world’s largest crude oil producer, illustrating how human ingenuity and freedom drive both resource discovery and knowledge expansion.


What would you rather discover: a new oil well that doubles the amount of your inventory or a way to double your gas mileage? Either discovery would double the distance you could drive your car.

Crude oil was once considered a liability rather than a valuable resource, especially by farmers or people drilling water wells. Then, Yale University chemistry professor Benjamin Silliman Jr. discovered how to refine oil into a variety of valuable products using fractional distillation – a technique developed by his father Benjamin Silliman Sr.

Many consider Silliman Sr. to be the father of American chemistry. He founded the American Journal of Science and was a founding member of the National Academy of Sciences.

In 1855, Pennsylvania entrepreneur George Bissell hired Silliman Jr. to analyze the possibility of using petroleum as a fuel for illumination. Silliman noted in his report:

Your company have in their possession a raw material from which, by simple and not expensive process, they may manufacture very valuable products. It is worthy of note that my experiments prove that nearly the whole of the raw product may be manufactured without waste, and this solely by a well-directed process which is in practice in one of the most simple of all chemical processes.

With this report, Bissell was able to create a corporation and raise the money to start drilling for oil. He hired Edwin Drake and put him in charge of drilling a well, and after many setbacks, Drake’s crew struck oil in quiet rural Titusville, Pennsylvania, on August 27, 1859.

One barrel of oil equals 42 gallons, and 7.44 barrels equals one tonne. (A tonne equals 2,204 pounds, while a ton equals 2,000 pounds.) The world currently has around 230 billion tonnes, or 1.7 trillion barrels in proven oil reserves.

What is also interesting is that the more oil we use, the more we discover. Reserves have increased 158 percent since 1980, from 93 billion tonnes to over 240 billion tonnes today. That occurred at the same time global population increased 82 percent from 4.4 billion to over 8 billion. For every 1 percent increase in population, oil reserves have increased 1.92 percent. We really have no idea how much oil the planet contains.

Global oil reserves have increased at a positive rate from 1980 to 2020.

Finding more oil is great, but finding more knowledge about how to discover more oil is even better. We use up the oil, but we don’t use up knowledge. In fact, the more knowledge you consume, the more it grows. These experiences illustrate the truth that it is knowledge that transforms atoms into resources. In fact, atoms without knowledge have no economic value.

After peaking at 9.6 million barrels per day in 1970, annual US crude oil production flattened and then generally declined for decades to a low of 5 million barrels per day in 2008. Then US entrepreneurs and petroleum engineers discovered two technologies: hydraulic fracturing and horizontal drilling.

Fracking is a multi-step process that has helped increase US crude oil production significantly.

US crude oil production reversed and has increased steadily since.

US field production of crude oil has seen its share of peaks and valleys since 1900.

Because of these entrepreneurs and innovators, the United States has become the largest producer of crude oil on the planet.

Nowadays, the US has the largest share of production in crude oil globally.

How about miles per gallon? The top-selling car in 1980 was the Oldsmobile Cutlass. Gas mileage on this vehicle averaged 20 miles per gallon (17 city/23 highway). By 2023, the Honda CR-V claimed the title as the most popular two-wheel drive car. The CR-V reported mileage at 31 miles per gallon (28 city/34 highway). That represents an increase of 55 percent over the 43-year period. The time required for a blue-collar worker to earn the money to buy a Cutlass in 1980 is about the same as it is today for a much safer and more comfortable CR-V.

America has energized the world by giving its citizens the freedom to discover more oil and create more knowledge. We enjoy a virtuous circle as more knowledge gives us more oil and more oil gives us more knowledge. We discover new knowledge with every new oil well that we drill. Human freedom truly is our most valuable resource.

This article was published at Gale Winds on 6/4/2024.

Society of Petroleum Engineers | Energy Production

Mazama Energy Reports Record 629°F Geothermal System

“Geothermal developer Mazama Energy announced it has created the world’s hottest enhanced geothermal system (EGS) at its pilot site in Oregon’s Newberry Volcano, reaching a bottomhole temperature of 629°F (331°C). The Frisco, Texas-based company said its latest milestone, achieved in late October, sets a new benchmark for geothermal development and advances its goal of generating electricity for less than $0.05/kWh.

Located in the Cascade Range, Newberry is one of the largest geothermal reservoirs in the US. Mazama mobilized a rig to the site in October 2024, converting a legacy well into a water injector and drilling a new deviated producer well to a total measured depth of 10,200 ft. The producer was placed within 6 ft of its planned trajectory, and circulation tests confirmed hydraulic connectivity between the wells. The project was funded in part by a $20-million grant awarded to Mazama last year by the US Department of Energy…

Mazama’s next step is to scale the technology to a 15-MW pilot project using horizontal wells, followed by a 200-MW commercial development at Newberry. Future wells are expected to target temperatures exceeding 750°F (400°C), which the company said could yield up to 10 times the power density while using 75% less water than current EGS methods.”

From Society of Petroleum Engineers.

The Economist | Energy Production

Geothermal’s Time Has Finally Come

“Fervo is a buzzy geothermal-techno­logy startup backed by Google and other high-powered tech investors that wants to turn a once-neglected source of energy into a powerhouse. The privately held firm, valued at some $1.4bn, will start producing electricity next year in the first phase of a 500-megawatt deal with the power division of Shell, an oil company, and with a Californian utility. That is the largest commercial contract agreed for geothermal electricity in the industry’s history.

It is the first shot in an incipient geothermal revolution. Today, less than 1% of global (and American) energy comes from geothermal. But researchers at Princeton University predict that technical innovations mean widely available geothermal power could, by 2050, produce nearly triple the current output of the country’s nuclear power plants (which supply roughly 20% of America’s electricity at present). By 2035, the International Energy Agency reckons cumulative investment in geothermal globally could reach $1trn, a big jump from the $1bn to $2bn invested in 2024.”

From The Economist.

Wired | Energy Production

Valar Atomics: First Nuclear Startup to Achieve Criticality

“Startup Valar Atomics said on Monday that it achieved criticality—an essential nuclear milestone—with the help of one of the country’s top nuclear laboratories. The El Segundo, California-based startup, which last week announced it had secured a $130 million funding round with backing from Palmer Luckey and Palantir CTO Shyam Sankar, claims that it is the first nuclear startup to create a critical fission reaction.

It’s also, more specifically, the first company in a special Department of Energy pilot program aiming to get at least three startups to criticality by July 4 of next year to announce it had achieved this reaction. The pilot program, which was formed following an executive order president Donald Trump signed in May, has upended US regulation of nuclear startups, allowing companies to reach new milestones like criticality at a rapid pace…

Criticality is the term used for when a nuclear reactor is sustaining a chain reaction—the first step in providing power…

There’s a difference between the type of criticality Valar reached this week—what’s known as cold criticality or zero-power criticality—and what’s needed to actually create nuclear power. Nuclear reactors use heat to create power, but in cold criticality, which is used to test a reactor’s design and physics, the reaction isn’t strong enough to create enough heat to make power.

Before this year, startups like Valar would have to go through the country’s nuclear regulator, the Nuclear Regulatory Commission (NRC), before trying any criticality tests. The NRC, which has a lengthy licensing process, traditionally maintains authority over all nuclear reactors. This includes small modular reactors, which, as their name suggests, are much smaller than traditional nuclear reactors; these advanced technologies, like the ones Valar is trying to bring to market, have never been commercially deployed in the US. However, both the Department of Defense and the Department of Energy have some legal ability to develop their own reactors without going through the NRC, including some solely used for research purposes.”

From Wired.

Oklo | Energy Production

Oklo Announces US Approval for Nuclear Safety Design Agreement of Aurora Fuel Fabrication Facility

“Oklo Inc, an advanced nuclear technology company, today announced that the U.S. Department of Energy (DOE) Idaho Operations Office has approved the Nuclear Safety Design Agreement (NSDA) for the Aurora Fuel Fabrication Facility (A3F) at Idaho National Laboratory (INL), selected to participate in the DOE’s Advanced Nuclear Fuel Line Pilot Projects.

The NSDA, the first under the DOE’s Fuel Line Pilot Projects, was approved in just under two weeks and helps demonstrate a new authorization pathway that has the potential to unlock U.S. industrial capacity, advance national energy security and create an accelerated and reproducible framework for scaling production capacity under the executive order ‘Deploying Advanced Nuclear Reactor Technologies for National Security’…

Located at INL, the A3F will fabricate fuel for Oklo’s first commercial-scale powerhouse, the Aurora-INL, which was selected for the DOE’s Reactor Pilot Program. Together, these facilities couple fuel production to power delivery for near-term commercial deployment of advanced nuclear energy.”

From Oklo.