The International Energy Agency's World Energy Outlook 2017 report once more points to the future expansion of US oil exports. “A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the US becomes a net exporter of oil in the late 2020s,” the agency said in a press release.
We have been aware of the potential of unconventional oil production for about a decade. Now, the increasing efficiency of new technology is finally realizing that potential.
The IEA's latest projections forecast that by 2025, the growth in American oil production will equal that of Saudi Arabia during its most expansive moment. The unprecedented growth will also include natural gas production, which is poised to surpass the combined yields of all former Soviet Union countries.
The projected 8 mb/d increase in oil production from 2010 to 2025 would be second to none in terms of a period of sustained growth in history, worldwide. On the other hand, a projected 630 bcm rise in shale gas production from 2008 to 2023 would set a new world record for natural gas.
The impact of this projected expansion for investments will be massive across North America. According to the IEA report, it will fuel “major investments in petrochemicals and other energy-intensive industries. It is also reordering international trade flows and challenging incumbent suppliers and business models.”
In short, around 2025, the US will have become the largest liquefied natural gas exporter in the world. Then, it will achieve the long cherished goal of exporting more oil than it imports.
While we will continue to import heavy crudes well-suited for America's refineries, the balance will still be positive as the export of lighter crude grows.
As the above graph shows, the conventional oil and gas output will tend to stabilize beginning in the late 2020s, after decades of dwindling. Meanwhile shale gas output will surpass that of both conventional oil and gas and unconventional oil, continuing on a trend that has been apparent since the Shale Revolution.
In the light of these projections, there is no doubt that the US will be a dominant force in oil and gas markets worldwide, for many years to come. As we keep developing new and cleaner technologies, like High Power Microwaves, and the cost efficiency of unconventional fossil fuel production improves, America’s energy sector will experience an era of unprecedented bonanza.
For IEA Executive Director Fatih Birol, “The United States will be the undisputed leader of global oil and gas markets for decades to come. There’s big growth coming from shale oil, and as such there’ll be a big difference between the U.S. and other producers.”
The agency believes that the US industry has displayed an increasing resilience, responding well to OPEC’s moves before and after the Iran embargo.
As the price or crude steadies at $60 per barrel, with production cuts needed to reduce the world’s oversupply, the IEA expects it to reach $83 by 2025. This represents a more modest expectation, since the agency had previously forecast prices of about $100 for that year.
By 2040, the IEA now expects the price of the barrel to reach $125.
In terms of consumption, IEA expects oil demand to drop on account of the spread of electric cars and other factors. By 2025, the world will be using about 100 million barrels per day, the agency projects. For the US, this will be highly beneficial. According to Birol, this will greatly reduce America’s import needs which “will bring a lot of dollars to U.S. business.”
It is nearly impossible to predict, as yet, what will happen when shale output begins to decline. The IEA predicts that by 2040, such a decline will put OPEC again in a position of power, boosting its global market by a few percent points.
But as we have already experienced with the Shale Revolution, it is hard to predict what new technologies will surface and how they will impact the global energy market. As the IEA put it, “There could be further surprises ahead.”
What is indisputable is the US will become an energy superpower - already with an unstoppable trifecta of global momentum, market breadth, and depth of commitment.