Although experts are predicting the U.S. could become energy self-sufficient by 2030, the country may hit another major landmark this year. In 2013, America is projected to surpass Russia and Saudi Arabia to become the largest worldwide producer of liquid fuels.
According to the International Energy Agency, the United States will become the world’s biggest oil producer for about five years starting in 2020, largely due to the boom in shale energy. However, when shale oil production slows in 2030, Russia and Saudi Arabia are expected to overtake the U.S. again.
Not to worry. BP Chief Economist Christof Ruehl claims that by that time will America be “99 percent self-sufficient” for its energy needs.
BP’s Energy Outlook 2030 report notes in 2005 the U.S. was only 70 percent energy self-sufficient, but its reliance on foreign energy imports has declined considerably since then. BP officials credit faster-than-expected production of “tight oil” (shale oil obtained via fracking) coupled with greater energy efficiency and a drop in demand, for the improvement.
The report explained that unconventional oil sources, particularly shale reserves, are forecast to provide all of the net growth in global oil supply needs until 2020, and more than 70 percent of growth to 2030.
In fact, the U.S. will most likely be a net exporter of oil within the next two decades, meeting China and India’s growing demand for imported oil. BP’s analysis shows that by 2030, energy use in the non-OECD economies “is expected to be 61 percent higher than in 2011, whereas use in the OECD will have grown by only 6 percent, and actually to have fallen in per capita terms.”
Crude oil trapped in shale rock formations will account for about 9 percent of global energy supply by 2030, according to U.S. News & World Report.
Overall, BP forecasts global energy demand to increase by 36 percent in the next 20 years, with almost all the growth coming from emerging economies. On the supply side, shale gas and tight oil, together with heavy oil and biofuels, will transform the U.S. energy balance.
It’s possible that oil could even be more abundant and cheaper in 2030 than it is today. Although there are huge shale gas and tight oil reserves around the world, so far only North America is doing much in the way of extraction. Improved technology and high prices offer the potential for development of resources elsewhere, dramatically increasing global supply.
“Vast unconventional reserves have been unlocked in the U.S., with oil production following gas,” Ruehl explained. “This delivery has been made possible not only by the resources and technology, but also by ‘above-ground’ factors such as a strong and competitive service sector, land access facilitated by private ownership, liquid markets, and favorable regulatory terms.”
BP officials estimate that Asia has 57 trillion cubic meters of technically recoverable shale gas resources and 50 billion barrels of tight oil, compared with 47 trillion cubic meters and 70 billion barrels respectively for North America.
Ruehl predicts that other countries will eventually figure out how to extract their shale, but that the U.S. will continue to lead the field.
China, for example, has huge shale reserves, but lacks the unique combination of factors that has helped bring about the American oil and gas boom, including a robust oilfield services sector, with large fleets of drilling rigs, sophisticated financial markets, and private ownership of reserves.
Of course, the forecasts for the next two decades hinge on often volatile international markets. BusinessWeek reports that the scenario in which the U.S. becomes the largest liquids producer “depends in part on whether Saudi Arabia reins in output to prevent oversupplying the market.” It’s a reasonable assumption, since “crude output from the Organization of Petroleum Exporting Countries won’t return to the 2013 level of 30 million barrels a day until 2020.”