Billionaire Saudi Prince Alwaleed bin Talal recently sent a letter to Saudi Oil Minister Aku al Naimi, warning him that the development of shale and natural gas energy sources represents a threat to their kingdom’s profiteering from their massive oil supply.

Per Sky News, the salient points of the letter read as follows…

Prince Alwaleed said demand for oil from Organisation of the Petroleum Exporting Countries (Opec) member states was “in continuous decline”.

He said Saudi Arabia’s heavy dependence on oil was “a truth that has really become a source of worry for many”.

…”Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92% of the budget for this year depends on oil,” he said.

“It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately.”

Our “Saudi Friends” may have reason to be worried.

Have you ever heard of the Bakken Formation?

On April 30, 2013, the United States Geological Survey (USGS) released an updated oil and gas resource assessment for the Bakken Formation and a new assessment for the Three Forks Formation in North Dakota, South Dakota and Montana. The assessments found that the formations contain an estimated mean of 7.4 billion barrels (BBO) of undiscovered, technically recoverable oil. The updated assessment for the Bakken and Three Forks represents a twofold increase over what has previously been thought.

The USGS assessment found that the Bakken Formation has an estimated mean oil resource of 3.65 BBO and the Three Forks Formation has an estimated mean resource of 3.73 BBO, for a total of 7.38 BBO, with a range of 4.42 (95 percent chance) to 11.43 BBO (5 percent chance). This assessment of both formations represents a significant increase over the estimated mean resource of 3.65 billion barrels of undiscovered oil in the Bakken Formation that was estimated in the 2008 assessment.

“These world-class formations contain even more energy resource potential than previously understood, which is important information as we continue to reduce our nation’s dependence on foreign sources of oil,” said Secretary of the Interior Sally Jewell. “We must develop our domestic energy resources armed with the best available science, and this unbiased, objective information will help private, nonprofit and government decision makers at all levels make informed decisions about the responsible development of these resources.”

The U.S. Energy Information Administration said the following, in a report published in January of this year,

When considering the market implications of abundant shale resources, it is important to distinguish between a technically recoverable resource, which is the focus of this report, and an economically recoverable resource. Technically recoverable resources represent the volumes of oil and natural gas that could be produced with current technology, regardless of oil and natural gas prices and production costs. Economically recoverable resources are resources that can be profitably produced under current market conditions. The economic recoverability of oil and gas resources depends on three factors: the costs of drilling and completing wells, the amount of oil or natural gas produced from an average well over its lifetime, and the prices received for oil and gas production. Recent experience with shale gas in the United States and other countries suggests that economic recoverability can be significantly influenced by above-the-ground factors as well as by geology. Key positive above-the-ground advantages in the United States and Canada that may not apply in other locations include private ownership of subsurface rights that provide a strong incentive for development; availability of many independent operators and supporting contractors with critical expertise and suitable drilling rigs and, preexisting gathering and pipeline infrastructure; and the availability of water resources for use in hydraulic fracturing.

Because they have proven to be quickly producible in large volumes at a relatively low cost, tight oil and shale gas resources have revolutionized U.S. oil and natural gas production, providing 29 percent of total U.S. crude oil production and 40 percent of total U.S. natural gas production in 2012. However, given the variation across the world’s shale formations in both geology and above-the-ground conditions, the extent to which global technically recoverable shale resources will prove to be economically recoverable is not yet clear. The market effect of shale resources outside the United States will depend on their own production costs, volumes, and wellhead prices. For example, a potential shale well that costs twice as much and produces half the output of a typical U.S. well would be unlikely to back out current supply sources of oil or natural gas. In many cases, even significantly smaller differences in costs, well productivity, or both can make the difference between a resource that is a market game changer and one that is economically irrelevant at current market prices.

There’s the rub. While our nation appears to have an abundant supply of natural gas and shale oil deposits, the catch is: how economically viable is the harvesting of these potential energy sources?

And, how does that help us cut our dependency on foreign oil, right now?

Our nation’s leaders, along with an bunch of others, have to literally cater to OPEC, in order to keep their countries operating. That gives the Saudis the power to influence national elections and the day-to-day lives of the citizens of countries who must buy their product in order to survive.

If American Businesses could find a way to cheaply harvest our own oil, buried so deep under our blessed land, our dependency on foreign oil would rapidly evaporate.

Unfortunately, though, while Obama and his Administration talk a good game, they have no intention of making it easier for American Entrepreneurs to come up with a viable, inexpensive production method for harvesting our oil supply, still waiting for us, down below.

Isn’t it peculiar how the Obama Administration and their soul mates, the Environmental Wackos, want to free us from “Big Oil”, and yet, they won’t give American Businesses the freedom to harvest our own natural resources?

I believe that is called “cutting off your nose to spite your face”, isn’t it?

Until He Comes,

KJ