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Report points to energy independence Wood Mackenzie says US will export more energy than it imports by 2025 thanks to higher oil and gas production, lower oil demand Alan Bailey Petroleum News
A report issued on Oct. 23 by research company Wood Mackenzie says that the United States will achieve energy independence by 2025, based on current trends in U.S. oil and gas production and consumption.
“A country can achieve energy independence through two channels, it can either produce more or consume less, and the U.S. is doing both,” said senior analyst James Brick. “Over the past seven years the U.S. has added 3 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 percent increase in U.S. oil and gas production.”
At the same time, improving efficiency in the use of oil for transportation is causing oil demand to drop, he said.
Export ban A key to accelerating the rate at which energy independence can be achieved is the lifting of a ban on the export of U.S. crude oil. If the opening up of exports were to lift the price of U.S. crude by, say, $5 per barrel, that could increase oil production by 350,000 to 450,000 barrels per day, an increase that would require about $5 billion of additional investment, Brick said.
But Brick acknowledged that upstream oil producers would gain most from the lifting of the export ban, although oilfield service companies and rig manufacturers would also benefit.
And, regardless of what happens to the export ban, evolving technologies will likely continue to push up oil and gas production, Brick said. In particular, techniques such as enhanced oil recovery and the re-fracturing of wells are showing much promise and could double hydrocarbon recovery rates, he said.
Fuel efficiency Although Wood Mackenzie has forecast the fuel efficiency of the U.S. vehicle fleet to improve by more than 40 percent by 2030, fuel efficiency could improve more quickly than that, driving down both oil demand and net oil imports. It is also possible that there could be an increased tendency for people to use cars in preference to less efficient light trucks and sport utility vehicles.
Factors that could jeopardize the achievement of energy independence include delays in developing critical export facilities; the imposition of regulations that discourage well fracking; and energy policies aimed at reducing carbon dioxide emissions, thus pushing a greater use of natural gas for power generation, Brick said.
Wood Mackenzie concludes that, while the investments leading to energy independence will bring economic benefits to the United States, the direct impacts of that independence will be more muted. And U.S. energy markets will remain linked to international risks, Wood Mackenzie thinks.
“Irrespective of the timing of independence, the U.S. has started its transformation from energy consuming giant to prominent exporter,” Brick concludes. “With this role shift come obvious economic benefits but also shifting risks and new responsibilities.”
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