U.S. expected soon to be crowned world’s oil king
11/12/2013 1:21 PM
11/13/2013 8:48 AM
The United States will surpass Russia and Saudi Arabia to become the world’s largest oil producer in 2015, the International Energy Agency forecasts.
But the IEA’s long-term energy outlook, released Tuesday, predicted the Middle East will retake its position a decade later as the dominant source of global oil supply growth.
American energy production is skyrocketing, led by Texas and North Dakota, as oil companies use the techniques of hydraulic fracturing and horizontal drilling to tap oil and natural gas trapped in shale rock.
“Technology and high prices are unlocking new supplies of oil, and of course also gas, that were previously thought to be out of reach,” Maria van der Hoeven, the IEA’s executive director, said Tuesday.
The International Energy Agency, which advises governments on energy issues, said America’s ascendancy as the world’s oil king is coming sooner than expected, and that North America’s need for oil imports will all but disappear by 2035.
But the Middle East, boosted by a surge in Iraqi production, is expected starting in the mid-2020s to take back its role as the world’s oil powerhouse as America’s shale oil output peaks and then starts a decline.
The International Energy Agency forecasts that “sweet spots” in America’s top shale oilfields will run out and that the drilling will move to less productive areas that struggle in cost competition with other nations.
But the agency added that it could be wrong about a U.S. decline.
“United States performance has consistently overshot most projections to date and it is possible that more resources will be found and developed to sustain production at a higher level and for longer than we project,” the IEA report said. “Especially if oil prices hold up, technology advances continue and environmental concerns are allayed.”
The drilling process of hydraulic fracturing, known as fracking, is opposed by environmental groups, which argue that it poses a threat to air and water. The process involves pumping high-pressure water and chemicals deep underground to release oil and gas from within shale rock.
The energy agency doesn’t expect other nations to match America’s success in shale drilling. The agency warned that, though global estimates of untapped oil reserves are on the rise, “this does not mean that the world is on the cusp of a new era of oil abundance.”
The IEA is optimistic about renewable sources of energy, saying such sources will account for nearly half the increase in power generation to 2035, with wind and solar leading the way. The report said China will account for the biggest increase in renewable use, more than the United States, the European Union and Japan combined.
The agency has less hope for efforts to combat global warming.
Van der Hoeven said greenhouse gas emissions – two-thirds of which come from the energy sector – “are still on a dangerous course.”
Global energy use is expected to rise by a third in the next two decades, initially driven by China. India and countries in Southeast Asia will take the lead in consumption in the 2020s, the IEA said, with the Middle East also emerging as a major energy consumer.
Brazil, meanwhile, is set to become a strong player in energy production, based mainly on a series of recent offshore oil discoveries. The International Energy Agency predicts Brazil’s output will triple to 6 million barrels a day by 2035. That would account for one-third of the increase in global oil production, the agency said, and make Brazil the sixth-largest oil producer.
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