Sunday, November 23, 2014
The U.S. will achieve energy independence by 2025, which will mark the first time since 1952 that the nation will export more energy than it imports, according to an outlook by Wood Mackenzie’s (Edinburgh, Scotland) Global Trends Service. The outlook underscores that higher production and lower demand are the forces driving U.S. energy independence.
“A country can achieve energy independence through two channels—it can either produce more or consume less, and the U.S. is doing both,” explained James Brick, senior analyst. “Over the last seven years, the U.S. has added three million barrels per day of tight oil and 27.5 billion cubic feet per day of shale gas to the global energy mix, a spectacular 42% increase in U.S. oil and gas production.” Meanwhile, U.S. oil demand is decreasing, primarily due to efficiency gains in the transport sector.
Wood Mackenzie indicates that the uncertainties facing the U.S. energy market fall into two broad categories, those that make it more likely it will achieve energy independence before 2025 and those that will delay it. The key uncertainties that can speed independence include a lifting of the U.S. crude oil export ban, higher tight oil production, and lower demand in the transport sector. By lifting the export ban, Wood Mackenzie says the price realized by U.S. upstream producers would increase as they would be able to access higher-priced international markets. If crude oil exports resulted in producers receiving an additional $5/bbl, production could increase by 350,000 bbld to 450,000 bbld. In order to produce this additional oil, an investment of about $5 billion would be needed.
Even if the crude oil export ban is not lifted, the U.S. could produce more tight oil than is currently anticipated. Brick comments, “Tight oil and shale gas plays are still evolving, and there are many opportunities for the application of new production techniques. Production could be up to three million barrels per day higher than our view of 10.3 million barrels per day by 2030 as a result of the application of technologies such as enhanced oil recovery (EOR) and re-fracturing. EOR techniques currently being tested are especially promising, and early indicators suggest recovery rates could double. Irrespective of the timing of independence, the U.S. has started its transformation from energy consuming giant to prominent exporter,” concludes Brick.
“A country can achieve energy independence through two channels—it can either produce more or consume less, and the U.S. is doing both,” explained James Brick, senior analyst. “Over the last seven years, the U.S. has added three million barrels per day of tight oil and 27.5 billion cubic feet per day of shale gas to the global energy mix, a spectacular 42% increase in U.S. oil and gas production.” Meanwhile, U.S. oil demand is decreasing, primarily due to efficiency gains in the transport sector.
Wood Mackenzie indicates that the uncertainties facing the U.S. energy market fall into two broad categories, those that make it more likely it will achieve energy independence before 2025 and those that will delay it. The key uncertainties that can speed independence include a lifting of the U.S. crude oil export ban, higher tight oil production, and lower demand in the transport sector. By lifting the export ban, Wood Mackenzie says the price realized by U.S. upstream producers would increase as they would be able to access higher-priced international markets. If crude oil exports resulted in producers receiving an additional $5/bbl, production could increase by 350,000 bbld to 450,000 bbld. In order to produce this additional oil, an investment of about $5 billion would be needed.
Even if the crude oil export ban is not lifted, the U.S. could produce more tight oil than is currently anticipated. Brick comments, “Tight oil and shale gas plays are still evolving, and there are many opportunities for the application of new production techniques. Production could be up to three million barrels per day higher than our view of 10.3 million barrels per day by 2030 as a result of the application of technologies such as enhanced oil recovery (EOR) and re-fracturing. EOR techniques currently being tested are especially promising, and early indicators suggest recovery rates could double. Irrespective of the timing of independence, the U.S. has started its transformation from energy consuming giant to prominent exporter,” concludes Brick.
