National Geographic NewsIn an indication of how "fracking" is reshaping the global energy picture, the International Energy Agency (IEA) today projected that the United States will overtake Saudi Arabia as the world's largest oil producer by 2017.
And within just three years, the United States will unseat Russia as the largest producer of natural gas.
Both results would have been unthinkable even a few short years ago, but the future geography of supply has shifted dramatically due to what IEA calls America's "energy renaissance." The credit goes to the sometimes controversial technologies like hydraulic fracturing of shale and deepwater production that have enabled the industry to tap into abundant, unconventional sources of oil and gas. New energy frontiers have opened in North Dakota and Pennsylvania.
The bottom line for the United States is fulfillment of a goal that eluded seven presidents over nearly four decades: energy independence. The U.S., which imports 20 percent of its total energy now, will become largely self-sufficient by 2035, concluded the IEA's annual World Energy Outlook, often viewed as the Bible of the industry. Add in Canada, which has its own unconventional production boom in Alberta's oil sands, and the continent is set to be a net oil exporter by 2030.
"North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world," said Maria van der Hoeven, executive director of the IEA, a Paris-based organization charged with maintaining global energy security.
Catching Saudi Arabia U.S. imports of oil are on track to fall from 10 million to 4 million barrels per day, Fatih Birol, IEA's chief economist and the main author of the report, told a London news conference. However, he added, increased domestic production, including biofuel, only accounts for 55 percent of the huge reduction in imported oil. The other 45 percent is due to the ramping up of improving federal fuel efficiency standards for cars and trucks.
According to the IEA, by 2020 America's oil production will reach 11.1 million barrels per day, up from 8.1 million in 2011. Saudi Arabia's production, meanwhile, will decline from 11.1 million to 10.6 million barrels per day. The renewed U.S. reign at the top of world oil producers may be short-lived. By 2025, IEA projects U.S. production will slip back to 10.9 million barrels per day, but Saudi Arabia's will have increased only to 10.8 million barrels per day.
The picture on natural gas is even more dramatic. By 2015, the U.S. should be producing 679 billion cubic meters (bcm) of natural gas, up from 604 bcm in 2010. That will be enough to edge out Russia, where production will be increasing too, but projected only to reach 675 bcm in three years. By 2020, the spread between the two nations will widen, with U.S. production of 747 bcm, well ahead of Russia's forecast 704 bcm. The U.S. should become a net gas exporter by 2020, the report adds.
No Country an Island
"The global energy landscape is changing rapidly, recasting the roles of countries and fuels," van der Hoeven said. What is happening in North America will certainly affect other countries worldwide, she added. "No country is an energy island."
For example, as America's need for imported oil declines, Asia is rapidly taking up the slack. The report estimates that by 2035, fully 90 percent of Middle East oil exports will head for Asia. That's a shift that will require Asian countries to put more resources toward keeping strategic shipping routes of oil secure. "There is a major new trade axis building between the Middle East and Asia," Birol said.
Indeed, Iraq alone will see its exports to Asia jump from 50 percent of output to 80 percent. The IEA reiterated its forecast last month that Iraq's production of oil would jump from 3 million to 8 million barrels per day by 2035, helping the war-torn country leapfrog over Russia to become the world's second largest exporter of oil, after Saudi Arabia.
Another effect of the altered energy landscape is large variances in natural gas prices. A few years ago, global prices of natural gas changed little from region to region. But natural gas prices in Europe are now five times higher than in the U.S., and Asia's are eight times greater. However, van der Hoeven said, as more gas becomes available globally for exports, that should push prices down outside the United States, too.