U.S. oil production to pass Saudi Arabia?!

by
Oil rigs are seen in Midland

There was big energy news Monday that could have a lasting affect on global politics, war, commerce, trade and just about everything else you can think of that revolves around oil — so pretty much everything.

Here’s the story from the Wall Street Journal:

A shale-oil boom will help the U.S. overtake Saudi Arabia as the world’s largest producer by 2020, according to the International Energy Agency, a shift that could transform not just energy supplies but also U.S. politics and diplomacy.

The Paris-based agency, which advises industrialized nations on their energy policies, said the global energy map “is being redrawn by the resurgence in oil and gas production in the United States.”

And here’s the story from the New York Times:

The United States will overtake Saudi Arabia as the world’s leading oil producer by about 2017 and will become a net oil exporter by 2030, the International Energy Agency said Monday.

That increased oil production, combined with new American policies to improve energy efficiency, means that the United States will become “all but self-sufficient” in meeting its energy needs in about two decades — a “dramatic reversal of the trend” in most developed countries, a new report released by the agency says.

And then yet another take from Bloomberg:

U.S. oil output is poised to surpass Saudi Arabia’s in the next decade (Editors note: meaning by 2022 at the latest), making the world’s biggest fuel consumer almost self-reliant and putting it on track to become a net exporter, the International Energy Agency said.

Growing supplies of crude extracted through new technology including hydraulic fracturing of underground rock formations will transform the U.S. into the largest producer for about five years starting about 2020, the Paris-based adviser to 28 nations said today in its annual World Energy Outlook. The U.S. met 83 percent of its energy needs in the first six months of this year, according to the Energy Department in Washington.

That’s three different dates from three different news organizations. The most startling difference is in the Bloomberg story – it says the U.S. will be the largest produce for about five years, starting about 2020. So the dominance won’t last long, according to that story.

The rest of the writers paint a sweeping picture of the U.S. energy policy changing to meet a new world order.

From the WSJ:

But the surge in U.S. oil production, to a projected 11.1 million barrels a day in 2020, has given the White House a chance to make peace with Republicans and energy executives, at least on some fronts. Like Republicans, Mr. Obama has said that growing energy extraction in the U.S. can create jobs and boost the economy. Also, the rising use of natural gas in place of coal to generate electricity helps reduce carbon-dioxide emissions without legislation.

The IEA, an authoritative source of information on global oil markets, is joining other forecasters such as the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration in predicting the sharp rise in U.S. oil production in the coming years.

The IEA also said natural gas will displace oil as the largest single fuel in the U.S. energy mix by 2030. U.S. carbon-dioxide emissions from energy consumption were down 5.3% in the first seven months of 2012, compared to the same period a year earlier, according to U.S. government figures. That came as natural gas accounted for 31% of U.S. electricity generation in the first eight months of this year, up from 24% a year earlier.

Then there’s this tidbit in the Bloomberg story:

The U.S. will pump 11.1 million barrels of oil a day in 2020 and 10.9 million in 2025, the IEA said. Those figures are 500,000 barrels a day and 100,000 barrels a day higher, respectively, than its forecasts for Saudi Arabia for those years. The desert kingdom is due to become the biggest producer again by 2030, pumping 11.4 million barrels a day versus 10.2 million in the U.S.

U.S. oil imports will drop to about 4 million barrels a day in 10 years from a current average of 10 million because of new production and stricter fuel-efficiency standards for cars and trucks, which will curb demand, Birol said.

And this in the New York Times story:

The report also predicted that global energy demand would grow between 35 and 46 percent from 2010 to 2035, depending on whether policies that have been proposed are put in place. Most of that growth will come from China, India and the Middle East, where the consuming class is growing rapidly. The consequences are “potentially far-reaching” for global energy markets and trade, the report said.

Dr. Birol noted, for example, that Middle Eastern oil once bound for the United States would probably be rerouted to China. American-mined coal, facing declining demand in its home market, is already heading to Europe and China instead.

There are several components of the sudden shift in the world’s energy supply, but the prime mover is a resurgence of oil and gas production in the United States, particularly the unlocking of new reserves of oil and gas found in shale rock. The widespread adoption of techniques like hydraulic fracturing and horizontal drilling has made those reserves much more accessible, and in the case of natural gasresulted in a vast glut that has sent prices plunging.

Either way it’s going to alter the landscape of U.S. energy policy. I just hope our lawmakers and business leaders are able to get a full, complete and accurate picture of just exactly what the IAEA is saying in the report – clearer than the business media is reporting.