Dramatic changes are sweeping across America — changes in GDP, jobs, national security. And these changes are the result of North America’s tight oil revolution.

That was the focus of an address given by Steve Trammel, research director and advisor for IHS CERA. Trammel spoke at the Energy M&A and Financing Forum in Denver, organized by Davis, Graham & Stubbs.

“Welcome to the renaissance. We have transformed the uneconomical into economical,” he said.

The North American tight oil revival includes shales, tight carbonates and tight sandstones. But it also includes conventional reservoirs that have been revitalized by unconventional technology such as slickwater fracturing and horizontal drilling, Trammel said.

From its peak in 1970 until just a few years ago, US liquids production was declining dramatically. Now, IHS expects production to reach 11.5 MMboe by the end of this decade, and some 4.2 MMbbl of that will come from tight oil reservoirs. Oil imports have already been dramatically reduced, and they are dropping further, Trammel said. “We’ve been importing about 60% in 2005, and it’s now about 40%. We expect it to reach 30%.”

On the play level, Canada’s Viking and Cardium, along with Texas’ Woodbine, are examples of conventional reservoirs that are being revitalized. Recoveries are currently about 10% in tight oil reservoirs, while the global average for conventional oil reservoirs is about 34%. It is possible that unconventional technology used in conventional rocks could push oil recoveries up to 40%, Trammel said.

A significant trend is the development of subsidiary zones in existing plays. The Three Forks is now adding measurable potential to the Bakken, and in the Wattenberg area the Codell is adding to the Niobrara. “We see new horizons coming on.”

The impact of North American tight oil is profound. “There’s going to be a global rebalancing. These low-cost resources offer major competitive advantages to the US,” Trammel said.

In terms of jobs, IHS calculates that US tight oil has created 800,000 jobs, and that will grow to 1.4 million in 2035. Tight oil will contribute US $188 billion in 2035 to the US economy, up from $116 billion in 2013. At the same time, tax revenues to governments will jump from $30 billion in 2012 to $51 billion in 2035.

Natural gas production is also growing tremendously. While conventional gas has declined and coalbed methane and tight gas volumes are flat, shale gas has become the dominant new source. “We see lots of improved competitiveness and capital inflows coming into the US, and there is lots of talk about chemical manufacturing coming in,” he said.

The low-cost natural gas resources are already delivering major advantages to the US economy. Jobs should grow from 900,000 in 2012 to 2.1 million in 2035, and GDP will grow from $122 billion in 2012 to $287 billion in 2053, while tax receipts rise from $31 billion in 2012 to $73 billion in 2035.

“This is really a wonderful picture,” Trammel said.

But challenges are real, he cautioned. Operators must keep costs down to be able to continue development, infrastructure must be built to handle the new production volumes, and the industry must win the support of communities and citizens.

Contact the author, Peggy Williams, at pwilliams@hartenergy.com.