49. ENERGY INTENSITY OF OIL AND GAS PRODUCTION
The U.S. Economic Census is a gold mine of data relating to EROEI. Here I use it to calculate the energy intensity of the oil and gas extraction industry as a whole -- e.g. "How much fuel does the industry use to find and extract oil and gas?" This is an important EROEI-related measure because peak oilers often say that oil production will stop "when it takes one barrel of oil to get one barrel of oil." Clearly the oil companies would be quick to notice if their fuel inputs were larger than their fuel outputs. So what is their fuel output/input ratio today?
The calculation gives the following results:
1) In 1997, the fuel intensity of oil and gas extraction (i.e. the ratio of oil-gas outputs to oil-gas inputs, in dollar values) was about 27 to 1. Extraction companies spent about 3.7% of their total revenues on fuel inputs. Clearly they are in no immediate danger of needing one barrel of oil to extract one barrel of oil.
2) 84% of the expenditures for input fuel went to natural gas. On a price per MMbtu (million btu) basis, gas was less expensive than oil products in 1997 (source), so it is clear that, as of 1997, natural gas (not oil) was the primary source of energy for the oil-gas extraction industry.
3) The direct EROEI of the oil and gas industry (only counting direct -- not indirect -- inputs) is at least 22. In other words, the industry uses one boe (barrel of oil equivalent) of energy to produce 22 boe of output energy. This is the case, even though the U.S. is 35 years past its Hubbert peak, so the idea that passing the peak will cause EROEI to drop below 1 (i.e. that it will take one barrel of oil to get one barrel of oil) is highly suspect.
4) Natural gas is the primary fuel of the oil and gas extraction industry, accounting for 88.5% of all input fuel energy. The lion's share of that is accounted for by gas produced on site and used as fuel.
===== CALCULATION DETAILS =====
I use two references:
The first is the 1997 Economic Census, Product Summary: Mining (pdf)
The second is the 1997 Economic Census, Materials Summary: Mining (pdf)
These two resources give detailed statistics on production and fuel consumption (by fuel) for each industry falling under the NAICS 21 (Mining) classification.
For example, on page 7 of the Product Summary, we find the total product shipments for NAICS 211111 (Crude Petroleum and Natural Gas).
Total value of all oil and natural gas shipped in 1997 (in 1997 $) = $77,300,748,000
Turning to page 7 of the Materials Summary, we find a complete breakdown of fuel consumed, by type, for NAICS 211111 (Crude Petroleum and Natural Gas Extraction):
The dollar figures for 1997 are:
Light fuel oil, light diesel used as fuel: $61,219,000
Heavy fuel oil, heavy diesel used as fuel: $20,259,000
Natural gas used as fuel: $459,812,000
Gasoline used as fuel: $105,255,000
On-site crude used as fuel: 600,000 barrels @ $30/barrel
On-site natural gas used as fuel: 715.9 bil cubic feet @ $2,709,558 per bil cubic foot = $1,939,800,000
Other fuels: $38,537,000
Undistributed (i.e. not classified): $217,520,000
Totaling these up, we get a grand total of $2,860,402,000 spent on fuel inputs to produce $77,300,748,000 worth of fuel outputs.
Dividing, we find that, in 1997, the fuel intensity for oil-gas (i.e. the ratio of oil-gas outputs to oil-gas inputs, measured in dollars) was about 27 to 1. Extraction companies spent about 3.7% of their total revenues on fuel inputs. Clearly they are in no immediate danger of needing one barrel of oil to extract one barrel of oil.
Another interesting fact: 84% of the expenditures for input fuel went to natural gas. On a price per MMbtu basis, gas was less expensive than oil products in 1997 (source), so it is clear that, as of 1997, natural gas was the primary source of energy for the crude/gas extraction industry.
To humor the EROEI people, I also calculated the energy inputs and outputs of NAICS 211111 (Crude and Natural Gas Extraction) for 1997, using census statistics:
In 1997, the industry used 1031.8 trillion btu (TTbtu) of input fuel. The breakdown is as follows:
Distillate, light oil: 11.5 TTbtu (1.1%)
Residual, heavy oil: 4.1 TTbtu (0.4%)
Purchased natural gas as fuel: 175.0 TTbtu (17.0%)
Gasoline: 12.2 TTbtu (1.2%)
On-site crude used as fuel: 3.5 TTbtu (0.3%)
On-site natural gas used as fuel: 738.1 TTbtu (71.5%)
Other fuels: At most 13.1 TTbtu (1.3%)
Undistributed fuels: At most 74.3 TTbtu (7.2%)
Total: 1031.8 TTbtu
Purchased amount of electricity for NAICS 211: 80,149,784,000kwh
(Note: This is an overestimate because it also includes electricity consumption by another NAICS category 211112 "Natural Gas Liquid Extraction")
Purchased amount of electricity = 274 TTbtu
Total energy input to NAICS 211111(Crude and Natural Gas Extraction): 1305.8 TTbtu
Now, let's look at the output side. Total product in 1997:
1990.7 million barrels crude oil and lease condensate
108.1 million barrels from stripper wells
14,606.2 billion cubic feet of gas
$7,788,301,000 in crude and gas not specified by kind (I assume this to be all crude in order to make the estimate of the output conservative. Gas gives more btus per unit price.)
Converting the above to btus we get: 29,348 TTbtu. Thus, the direct EROEI for oil and gas in the U.S. is at least 29,348 TTbtu/1305.8 TTbtu = 22.
Now, let's compare this to the value calculated financially:
Fuel costs = $1,780,528,000
Electricity costs = $1,067,804,000
Total value of oil and gas produced = $77,300,748,000
(Value of energy produced)/(Cost of energy inputs) =
$77,300,748,000/$2,848,332,000 = 27
The financial value is only off by 5 percentage points, and thus gives a decent approximation of actual direct EROEI.