International Energy Agency says US oil production between 2010 and 2025 will grow at a rate unparalleled in history
The shale revolution in north America means the US is destined to become a net oil exporter within 10 years, for the first time since the 1950s.
The International Energy Agency said it expected that American oil production between 2010 and 2025 would grow at a rate unparalleled by any country in history, with far-reaching consequences for the US and the world.
The last time the US exported more oil than it imported was 1953, and a ban on oil exports was lifted only in 2015.
Technological developments in drilling and fracking since the turn of this century have unlocked huge reserves of gas and oil trapped in shale rock, and redrawn the energy landscape.
Americans now pay less for their petrol, and the oil being pumped from states including Texas and North Dakota has increasingly diminished oil cartel Opec’s ability to control global prices.
“The US is becoming an undisputed global leader in oil and gas production. It has major implications across the energy world,” said Dr Fatih Birol, the executive director of the IEA.
The economist added that the expected rises in US oil production exceeded Saudi Arabia’s growth between the 1960s and 1970s, and the increase in American gas production would eclipse the Soviet Union’s gas growth when it exploited Siberian fields.
In a new report, the energy watchdog said the US’s reduced oil dependency would upend the international trade order. “Expansion on this scale is having wide-ranging impacts within north America, fuelling major investments in petrochemicals and other energy-intensive industries. It is also reordering international trade flows and challenging incumbent suppliers and business models,” the authors said.
Today, global oil production is dominated by Russia, the US and Opec members, in particular Saudi Arabia. Russia is second only to the US for gas production, followed by Iran and Qatar, which is the world leader in liquefying and exporting natural gas (LNG).
However, the US is expected to overtake Qatar and become the world’s biggest LNG exporter by the mid-2020s. The IEA’s best estimate is that the US then becomes a net oil exporter around 2027, slightly later than the US government’s forecast of 2026.
Donald Trump has pursued an “America first” energy agenda that promises to reduce dependence on foreign oil. But the energy watchdog noted that the US would not be on track to become a net oil exporter were it not for vehicle fuel economy standards set by Barack Obama.
By 2030, China will have developed so much that it is expected to overtake the US to become the world’s biggest oil consumer. Asia as a whole is also expected to increase its appetite for gas shipped across the seas, with 70% of LNG predicted to end up in Asian ports by 2040.
Globally, energy demand will keep climbing but more slowly than in the past, largely due to population growth and increasing affluence in poorer countries. By 2040, the IEA expects energy needs to have risen by 30%, or the equivalent of adding another China and India worth of demand.
Unlike some experts and oil companies such as Shell, which believe demand for the fuel could peak as soon as the next decade, the IEA sees it slowing but not peaking even by 2040.
Birol said the increasing electrification of energy is one of the big trends, and he expects the number of electric cars to grow from 2m today to around 300m by 2040. But he said big oil’s days were not numbered yet. “It is too early in my view to write the obituary of oil. Oil demand will still grow because of trucks, ships and aviation, and petrochemicals,” he said.
Gas is also expected to continue playing an important role in meeting new energy demand. But renewable sources are expected to take two-thirds of worldwide investment in new power stations, as they become the cheapest source of new power for many countries.
Huge installations of solar power by China and India will help renewables to account for 40% of power generation globally by 2040, up from 24% now.
Despite the boom in green energy, CO2 emissions from energy are expected to increase to 35.7 gigatonnes by 2040, far too high to avoid dangerous impacts from global warming.
But Birol, speaking as nearly 200 governments meet for climate talks in Bonn, said he was still hopeful that could change. “I have a strong hope that stronger government policies and stronger technology can change this trend. As a result of innovation, we may well see a different picture.”
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