Even without Mitt Romney in the White House, North America may find its way to energy independence in the foreseeable future. The International Energy Agency, which launched the 2012 World Energy Outlook on November 12, predicts that America is poised to take a leading role in oil production by 2020.
The American Petroleum Institute points out that in 2011, America was the third leading supplier of crude oil, NGPL, and other liquids in the world, producing on average 9 million barrels per day. Russia came in at number two, producing 10.2 million bpd, while Saudi Arabia took the crown with 11.1 million bpd on average for the year.
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For the first time since 1949, the United States has become a net exporter of petroleum products. After declining steadily since the mid-1980s, crude oil production is on the rise largely thanks to aggressive shale plays. However, crude oil production rates look modest compared to the substantial increase in natural gas production since the mid-1980s, which is currently higher than it has ever been.
Technological advances such as hydraulic fracturing and horizontal drilling have been essential to access more resources. Deposits of gas and oil in shale formations that was previously inaccessible is are now being tapped for thousands of barrels a day. Following the technology comes the infrastructure that supports it, and with billions in exploration and development projects under way, America’s capacity for oil and gas production is “at the forefront of a sweeping transformation,” according to IEA executive director Maria van der Hoeven.
The oil and gas supermajors have not failed to notice this trend, either. Exxon Mobil (NYSE:XOM), British Petroluem (NYSE:BP), and Chevron (NYSE:CVX) have aggressively involved themselves in North American natural gas projects and made plays for resources that were previously inaccessible. Shale formations have suddenly become much more economically feasible because of new technology.
On top of widely dispersed shale plays, the U.S. is estimated to have nearly 40 billion barrels of oil, and 170 trillion cubic feet of natural gas yet to be discovered off its shores.
The IEA predicts that global energy demand will rise by 30 percent through 2040, with most of that growth in China, India, and the Middle East. As much as 90 percent of oil exports from the Middle East are expected to head to Asia by 2035, and it’s likely that North America will be exporting oil, natural gas, and coal by that time as well.
Instead of consuming more oil, the United States will meet its shifting energy needs with more efficiencies, renewable energies, and natural gas. Despite energy demands rising, the share of coal and oil in the energy mix in the U.S. is expected to decline to just over 50 percent by 2035.
Fossil fuels will remain a critical part of the global energy mix, but a less important part of the energy mix in the OECD. All together, these trends point to a fundamentally different role for the United States and North America in the energy market of 2035.