Monday, November 12, 2012

USA Could Be World Oil Production Leader By 2020

According to the International Energy Agency, a shale-oil boom will thrust the U.S. ahead of Saudi Arabia as the world's largest oil producer by 2020. In its annual World Energy Outlook, the IEA, 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."

The assessment contrasts with last year when it envisioned Russia and Saudi Arabia vying for the top position.  The report says North America could become a net oil exporter around 2030.

This shift will be driven primarily by the faster-than-expected development of hydrocarbon resources locked in shale and other tight rock formations that have just started to be unlocked by a new combination of two technologies: hydraulic fracturing and horizontal drilling.

The IEA's projections show U.S. oil production peaking in 2020 at 11.1 million barrels a day, up from 8.1 million barrels a day in 2011. Within a decade, the IEA forecasts that U.S. oil imports will drop by more than half to just four million barrels a day, from 10 million barrels a day currently. Much of this decline will be because of higher domestic production, but efforts to improve energy efficiency in the transport sector will also prove significant, the IEA said.

The IEA warned that the emergence of shale gas as a game changer in global energy has a downside risk, in that it will contribute to increased competition for water resources needed for energy projects.
Shale oil and gas are extracted by pumping water, sand and chemicals into the ground at high pressure to crack rocks open, a process known as hydraulic fracturing, or "fracking."
But the intensive use of water, "will increasingly impose additional costs," and could "threaten the viability of projects" for shale oil and gas, and also biofuels, the agency said. (WSJ, 11/12/2012)

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