The U.S. contains some of the world's most thoroughly explored oil and gas basins. Most of the accessible, high-quality oil and natural gas have already been or are being produced, and remaining resources are increasingly concentrated in geologically challenging and environmentally sensitive settings.

Ultimately, it will be private-sector entrepreneurship and dollars that bring tomorrow's energy resources to the marketplace. The oil and gas industry is investing in exploration and production around the globe to meet future demand. Yet the Federal government has important roles to play as well in spurring the advanced technologies needed to recover domestic resources. Developing these new technologies for domestic use will entail risky, long-term R&D that the private sector has not undertaken on its own.

Ensuring that domestic resources contribute to reliable, affordable natural gas and oil supplies in the future will require advanced technology that can:

	CLICK ON GRAPHIC TO ENLARGE
	U.S. natural gas produced to date (990 Tcf) and proved reserves currently being targeted by producers (183 Tcf) are just the tip of resources in place. Vast technically recoverable resources exist -- estimated at 1,400 trillion cubic feet -- yet most are currently too expensive to produce. This category includes deep gas, tight gas in low permeability sandstone formations, coal bed natural gas, and gas shales. In addition, methane hydrates represent enormous future potential, estimated at 200,000 trillion cubic feet.

• Cost-effectively recover resources in challenging formations. Conventional recovery methods are no longer adequate to competitively find and produce remaining domestic natural gas and oil resources, which are increasingly found in formations such as deep reservoirs, deep offshore, low-permeability sandstone, shales, tar sands, and coal beds. Economic recovery of these resources will require breakthroughs in exploration, drilling, completion, and stimulation. Deep gas is one example of an underutilized, high-potential resource. To date, less than 1 percent of all wells drilled in the United States have penetrated below 15,000 feet, and only a small fraction of those have tested to 20,000 feet; yet deep wells account for 7 percent of national production. High costs and risks (single wells can cost tens of millions of dollars) currently restrict deep drilling to only the most favorable prospects. To fully realize the great potential of deep gas, industry — with DOE assistance — is actively investing in technologies that can achieve the dramatic cost and risk reductions needed.
• Extend the life of mature oil and natural gas fields. Under current market economics and incentives, when oil or natural gas production declines to the point that operating costs exceed revenue, a producer is often forced by economics to abandon resources remaining in the ground. Once abandoned, these resources will probably never be accessible again. Anywhere from 50 to 90 percent of crude oil and 10 to 95 percent of natural gas can be left in the ground in discovered fields — much of which potentially could be produced economically with advanced recovery technologies. In total, mature U.S. basins contain an enormous volume of resources, estimated at 377 billion barrels of crude oil (16 times currently proved domestic oil reserves). Enhanced oil recovery (EOR) and microhole monitoring and drilling can enable greater recovery of these resources.
• Protect water resources. According to the American Petroleum Institute, U.S. onshore operations generate over 15 billion barrels of produced water annually, mostly in conjunction with oil production. Typically, natural gas operations generate far less produced water, with the exception of coalbed methane and tight gas production, which represent an increasing share of domestic gas production. Currently, almost all this water is re-injected – sometimes to enhance oil production – but more often into a non-hydrocarbon-bearing aquifer, which serves as a permanent disposal site. Opportunities exist, especially in arid western States, to reuse the water in such applications as irrigation and livestock watering. Most often, produced water meets Federal clean water and drinking water standards. However, in some cases the water contains high levels of sodium and must be treated before reuse.
• Enable operations in sensitive environments . Much of our Nation's technically recoverable natural gas resources and crude oil resources are on public lands, for which the Federal government has management and resource protection responsibilities. Advanced technologies and practices can reduce the footprints of oil exploration and production, enabling exploration and production with minimal environmental impact.

  	CLICK ON GRAPHIC TO ENLARGE
  	Although U.S. oil basins are mature, significant volumes of resources remain – far exceeding the 194 billion barrels produced to date and the proved reserves of 23 billion barrels currently being targeted by producers. Indeed, more than two thirds of all oil discovered in America still lies in the ground, economically unrecoverable by current technology. Of that vast, untapped resource, more than half lies at relatively shallow depths. If only 10% of that shallow resource could be converted to proved reserves with the aid of advanced technology, it would equal ten years of OPEC imports at current levels.

• Assess novel and emerging categories of resources . For the long-term, several novel resources have enormous potential to meet U.S. energy needs. Methane hydrates – methane molecules trapped in an ice-like solid – are found in the arctic below permafrost and in the sediments of the ocean's deep waters. Estimated volume of methane contained in domestic methane hydrates is a staggering 200,000 trillion cubic feet. The technology for recovering hydrates is in its infancy and the R&D is very risky. Although significant methane production is not expected before 2015, many scientists and natural gas producers believe that methane production is feasible and merits Federal attention and investment.¹⁷ Another emerging resource is oil found in oil shale and oil sands. While some of this oil is economically recoverable with current technology, environmental issues associated with producing more of this resource are a significant technology challenge.
• Reliably deliver America's energy. Once produced, natural gas often makes a long journey by pipelines to reach consumers. To keep up with demand, the National Petroleum Council estimates that by 2015 almost 40,000 miles of new gas transmission lines and almost 275,000 miles of distribution mains will be needed. DOE and industry also report the need for over 250 billion cubic feet of new natural gas storage capacity in market areas.
• Enabling a growing role for LNG. Traditionally, most natural gas imports to the United States have come by pipeline from Canada. But as Canadian production peaks or Canadian consumption rises, an increasingly greater portion of U.S. natural gas imports will need to originate outside of North America, transported by tanker in the form of liquefied natural gas (LNG). DOE estimates that LNG will account for 14 to 17 percent of U.S. natural gas supply in 2025, up from about 2 percent today. Equipping our Nation to receive, regasify, and store substantial volumes of LNG will require sizeable private-sector investment in building and upgrading LNG facilities. Government also has important roles to play, in promoting the R&D needed to improve the efficiency and safety of LNG facilities and to achieve interchangeability of LNG with other natural gas in end-use applications. In addition, government action is needed to streamline regulatory frameworks and to engage communities in making informed decisions about the siting of LNG facilities.

The challenges attending domestic oil and natural gas production are not trivial; neither are the implications for our future. By investing today in the necessary R&D, our Nation can successfully maintain the energy foundation for a growing economy and high quality of life, and enhance our energy security and balance of trade, by making effective use of domestic resources.