RIYADH: In the World Energy Outlook 2012, when good, old friend Fatih Birol, declared that the energy world was undergoing a major transformation – he also presented a timeframe for it to be accomplished.
Peaking in 2020, he then said, US crude production would overtake Saudi Arabia by 2017, adding that over the next few years, traditional gas producers too would lose their market influence.
The prophecies are indeed coming true – albeit – much earlier than projected.
The US is now destined to end 2013 as the world’s largest producer of petroleum and natural gas, surpassing Russia and Saudi Arabia, the US Energy Information Administration (EIA), is now saying.
And the Paris based International Energy Agency (IEA) is agreeing too. “With output of more than 10 million barrels per day for the last two quarters, its highest in decades, the nation is set to become the largest non-OPEC liquids producer by the second quarter of 2014, overtaking Russia. And that’s not even counting biofuels and refinery gains,” the IEA said, estimating that US liquids production will average 11m bpd in 2014 versus 10.86m in Russia.
And as per the EIA, while the US produced the equivalent of about 22m barrels a day of oil, natural gas and related fuels in July, the combined US petroleum and gas production was projected to hit 50 quadrillion British thermal units, or 25m barrels of oil equivalent a day in 2013, outpacing Russian production by 5 quadrillion BTU. Petroleum production includes crude oil, natural gas liquids, condensates, and biofuels.
The US was roughly even with Russia as the top producer in 2012 of the petroleum and gas fuels combined. Yet last year it was still lagging behind the long time global crude leader Saudi Arabia.
But the catch up game is now on.
Russia produced an average of 10.8m barrels of oil and related fuel a day in the first half of this year. That was about 900,000 barrels a day more than the US — but down from a gap of 3m barrels a day a few years ago.
And as of July, Saudi Arabia was pumping 11.7m barrels a day, according to the IEA. Russia was second, at 10.8m barrels, while the US was third, at 10.3m.
But in the meantime, the amount of crude from two of the hottest plays in the US—the Bakken oil field in North Dakota and the Eagle Ford shale formation in South Texas— continues to rise rapidly.
Since 2008, US petroleum production has increased 7 quadrillion BTU, with “dramatic” growth in Texas and North Dakota, the EIA said.
US natural gas production too has risen 3 quadrillion BTU over the same period. And in the meantime, Russia and Saudi Arabia each increased their combined petroleum and natural gas production by about 1 quadrillion BTU since 2008.
Helped by the boom in hydraulic fracturing, or fracking, production from shale deposits in the US is now set to surpass Saudi Arabia in petroleum output in 2013, making it the world leader in each fuel, the US Energy Information Administration is now claiming and underlining.
Consequent to these developments, US imports of natural gas have fallen 32 per cent and crude oil imports fell 15pc over the last five years.
This is indeed a big moment in the US energy timeline. “This is a remarkable turn of events,” Adam Sieminski, head of the US Energy Information Administration is asserting. And indeed none can deny. “This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn’t in a million years have dreamed about.”
How true indeed!
Consequent to all this, global energy geopolitics is witnessing a major metamorphosis. Recent regional political developments too underline that. After all, Washington is no more as dependent on Middle Eastern crude– as it was until a few years back. And this is lessening the leverage Riyadh and other regional crude producers could now muster in Washington. Fracking has altered the energy geopolitical landscape.