Monday, December 3, 2012

Forecast of U.S. oil supremacy draws wide notice, and doubts

—Wesley Loy

The Paris-based International Energy Agency created quite a stir Nov. 12 with the launch of its 2012 World Energy Outlook.

The report made global headlines with some startling predictions about U.S. oil and gas production.

The recent rebound in U.S. production is driven by upstream technologies that are unlocking light tight oil and shale gas resources, the IEA report said.

By around 2020, the United States is projected to become the largest global oil producer, overtaking Saudi Arabia until the mid-2020s, the report said.

Concurrently, the country will start to see the impact of new fuel efficiency measures in the transportation sector.

“The result is a continued fall in U.S. oil imports, to the extent that North America becomes a net oil exporter around 2030,” the IEA report said.

Further, under what the IEA calls its central scenario, the United States becomes a net exporter of natural gas by 2020, and is “almost self-sufficient in energy, in net terms, by 2035,” an IEA press release said.

The IEA describes itself as an autonomous organization working to ensure reliable, affordable and clean energy. It has 28 member countries, including the United States and Canada. The prediction that the United States will become the world’s top oil producer by 2020 surprised many, and brought out a few skeptics.

Analysts with Deutsche Bank were reported to have produced an investor note arguing the United States won’t surpass Saudi Arabia as the No. 1 oil producer. They said U.S. policy restricting exports, coupled with sagging domestic demand for oil, could soften prices and discourage project development.

“The idea that the U.S. could overtake Saudi Arabia, even temporarily, is a stunning development after years of seemingly inexorable declines in domestic oil production,” wrote Kevin Bullis, senior editor for the MIT Technology Review.

As for the IEA’s conclusion that the United States could be nearly energy self-sufficient by 2035, that’s only after offsetting oil imports with exports of coal and natural gas, Bullis noted.

“To be truly energy independent,” he wrote, “the United States would have to invest in technology for converting natural gas and coal into the liquid fuels needed for transportation, or have other technical breakthroughs, such as improved batteries or biofuels, that would quickly reduce the demand for oil.”

Read more: http://www.petroleumnews.com/pntruncate/940939672.shtml