Recent growth in oil and gas production are projected to make the U.S. the world’s No. 1 oil producer by about 2020, according to a report released Monday.
In its World Energy Outlook 2012 the International Energy Agency states that energy developments in the U.S. are profound and their effect will be felt well beyond North America and the energy sector.
U.S. production, driven by technologies that are unlocking light tight oil and shale gas resources are spurring economic activity, the report states. Less expensive gas and electricity prices are giving the industry a competitive edge and changing North America’s role in the global energy trade.
Currently, the U.S. is the world’s No. 3 oil producer behind Saudi Arabia (No. 1) and Russia (No. 2), according to the most recent (2011) data from the International Energy Agency. China is the No. 4 oil producer, Iran No. 5 and Canada No. 6.
By about 2020, the U.S. is projected to pass Saudi Arabia as the largest global oil producer and will keep that position until the mid-2020s, according to the IEA. The result is a continued fall in U.S. oil imports to the extent North America becomes a net oil exporter in about 2030.
The trend accelerates the switch in direction of international oil trade toward Asia, putting a focus on the security of the strategic routes that bring Middle East oil to Asian markets, the report stated.
“The United States, which currently imports around 20 percent of its total energy needs, becomes all but self-sufficient in net terms — a dramatic reversal of the trend seen in most other energy-importing countries,” the report’s authors wrote.
Additionally, the U.S. has adopted new fuel economy standards, China is targeting a 16 percent reduction in energy intensity by 2015, the European Union has committed a cut of 20 percent in its 2020 energy demand and Japan aims to cut 10 percent from electricity consumption by 2030, according to the IEA.
But even with these and other new policies in place much of the potential to improve energy efficiency remains untapped, the report states. Members of the autonomous IEA include Australia, Canada, France, Germany, Italy, Japan, Korea, Norway, Turkey, the U.S. and the United Kingdom.
Regarding other issues the report found:
• Trucks deliver a large share of oil demand growth;
• Natural gas is the only fossil fuel for which global demand grows in all scenarios, showing that it fares well under different policy conditions, but the outlook varies by region. In the U.S., low prices and abundant supply see natural gas overtake oil around 2030 to become the largest fuel in the energy mix.
• Oil output in Iraq exceeds 6 million barrels a day in 2020 and rises to more than 8 million barrels a day in 2035. Without this supply growth, oil markets would be set for difficult times, characterized by prices that are almost $15 a barrel higher than the level in the New Policies Scenario by 2035. Iraq stands to gain almost $5 trillion in oil export revenue during that period, an annual average of $200 billion, providing an opportunity to transform the country’s prospects;
• Successive editions of the World Energy Outlook report have shown that the climate goal of limiting warming to 2 degrees C is becoming more difficult and more costly with each passing year. No more than a third of proven fossil fuels reserves can be consumed before 2050 if the world is to achieve the 2 degrees C goal unless carbon capture and storage technology is widely deployed. Almost two-thirds of these carbon reserves are related to coal, 22 percent to oil and 15 percent to natural gas;
• Coal has met nearly half of the rise in global energy demand during the past decade, growing faster even than total renewables; and
• The anticipated role of nuclear power has been scaled back as countries have reviewed policies in the wake of the 2011 accident at Japan’s Fukushima Daiichi nuclear power station;
• A steady increase in hydropower and the rapid expansion of wind and solar power has cemented the position of renewables as an indispensable part of the global energy mix. By 2035, renewables will account for almost a third of total electricity output. Solar grows more rapidly than any other renewable technology.
Oklahoma is the No. 5 oil producing state in the nation and the No. 4 natural gas producer. It has more than 125,000 oil and natural gas wells, producing more than 72 million barrels of oil each year, according to the Oklahoma Energy Resources Board. Eight percent of the nation’s natural gas liquid reserves are located in the state.
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