Oil wells in Baytown, Texas. Photo by Roger Wollstadt.
Believe it or not, according to new reports published in November, the U.S is currently on track to become an oil-producing heavyweight in less than a decade.
According to Reuters, Americans are edging up the Saudis and the Russians to be the world’s top oil producer by 2017. The International Energy Agency (IEA) reported a drop in U.S. oil imports and additionally projects that North America will be a net oil exporter by around 2030, and the United States could become self-sufficient in energy by 2035.
“Energy developments in the United States are profound and their effect will be felt well beyond North America,” the IEA notes in its annual World Energy Outlook report.
Exxon released similar research findings on what it’s calling an “energy renaissance” in America. According to a CBSNews article, the gas corporation’s study shows that the U.S. will actually become a net exporter of oil and gas by the middle of the next decade, though demand for energy will grow worldwide. Furthermore, as natural gas overtakes coal as the second most used fuel, by 2025, “the U.S. will likely be exporting natural gas in large volumes and producing more oil while consuming less.”
This sudden growth in U.S. oil production appears to be due to the advancement of technological systems that have created ease and enterprise within the industry.
“We are an oil producer, the third largest after Russia and Saudi Arabia,” Michael Lynch, President of Strategic Energy & Economic Research, tells BTR. “Production is growing now, and will probably continue to do so. Deep water oil fields and tight or shale oil are the primary contributors.”
Echoing that sentiment, Dan Gundersen, Vice President of energy finance for Sandstorm Metals & Energy Ltd tells The Wall Street Journal’s Market Watch, “Improvements in well-stimulation technology have made it possible to effectively access previously uneconomic oil resources.”
As prime example, Gunderson points to the fact that U.S. field production of crude oil was at around four million barrels a day in September 2008, and hit nearly 6.2 million barrels a day this past August 2012, according to Energy Information Administration data. In addition, “the price of the commodity has especially motivated exploration and production companies to focus on oil over [natural] gas for the past few years.”
Nevertheless, says Lynch, it may be a little advantageous to say the U.S. will be completely independent by 2020 as many are reporting.
“I think it’s possible, you know, maybe 50/50, but I don’t think it’s that important if we’re 100 percent,” Lynch points out. “The main thing is there’s a lot of oil deposits around the country. We know how to produce oil for a reasonable price, but we need trained people and equipment.”
And, according to Anas Alhajji, Chief Economist at NGP Energy Capital Management, it’s nearly impossible for the U.S. to completely disconnect from the Middle East due to the possibility of unexpected catastrophes.
“Saudi spare production capacity is needed during crises, such as hurricanes in the Gulf of Mexico, and to fill the U.S. Strategic Petroleum Reserve,” Alhajji observes to Market Watch. “Also, the quality of Iraqi and Kuwaiti crudes is suitable for U.S. refineries; U.S. strategic alliances with Saudi Arabia, Iraq and Kuwait are significant; and import diversity is important for reducing risk of interruptions.”
Lynch predicts the year 2035 as a more likely estimate of when the U.S. could be independent of all imports. He feels the outcome will be most beneficially economically, both from a consumer and government perspective.
“The main thing is it’s good economically in a sense that we’re spending less money on foreign oil to help with the budget deficit,” he comments. “Consumers have more questions about the environment that still need to be addressed. I don’t think there will be a big impact on the environment though. It’s the burning of coal that hurts the environment most.”
And while the U.S. has made headway in its progression of alternative energy strategies, Lynch believes a multilayered approach is more appropriate.
“We shouldn’t ‘focus’ on any particular thing, but let consumers choose what is best for them,” he believes. “R&D for alternative energies, particularly those that do not emit greenhouse gases (solar, wind, nuclear) to make them cheaper is definitely advisable.”