RIYADH: Despite new crude frontiers all around, Middle East continues to be the kingpin in quenching the global energy thirst.

At the recently held EIA Energy Conference in Washington, while some heavy-weights were heard urging Washington to capitalise on the moment and use the newly found asset base to advance its political and foreign policy objectives, an influential dissenting voice was that of Maria van der Hooven, the IEA Executive Director asserting; the US energy security “Golden Age” is an illusion!

Ever since generating bold headlines globally when energy guru, dear friend, Fatih Birol pointed out while presenting the IEA World Energy Outlook 2012 that the US was on its way to overtake Saudi Arabia in crude output, the agency has been attempting to tame expectations.

A year later, unveiling the WEO-2013 last November in London, Birol insisted on terming the US shale “a surge, rather than revolution.”

“I think not only in the United States, but also in Europe, many people believe that after the shale revolution, the importance of the Middle East is diminishing,” Birol told Houston Chronicle a few months later.

“I think this is not only wrong from an economic point of view, but also from a policy point of view. It is misleading.”

“There is one major resource base in the world which could meet the growth in the global oil demand, which is the Middle East,” he said. “Without the Middle East, we will not be able to meet the growth, specifically in Asia.”

The shale boom has made the United States less dependent on imported crude, but oil produced from Middle East still plays a fundamental role in meeting energy demand, Andrew Lipow, president of Houston-based consulting firm Lipow Oil Associates too was quoted as saying.

Jim Burkhard, head of global oil market research for HIS, too agreed; the role of Middle East oil has not declined as a result of growing production in the United States.

“What’s happened in the US and North America overall is vitally important to the world oil market, but that doesn’t mean that the Middle East is suddenly irrelevant,” he told the newspaper.

There are also questions about the sustainability of the shale revolution. North Dakota is an example.

In April, it produced 30 million barrels of oil in April -- as much as it had in all of 2004. But the growth is unsustainable, argues Ben Casselman.

There’s little doubt that the Bakken Shale, North Dakota’s main oil-producing reservoir, contains billions of barrels of crude.

The question is about getting it out. Wells drilled into shale rock like the Bakken decline especially fast, as much as 70 per cent in the first year. That means oil production is a treadmill: The more they produce, the more they have to drill to keep up. There are signs now North Dakota may already be struggling to stay on the drilling treadmill, Casselman writes.

Respected gas man, Morten Frisch of the UK based MF Consultancy too has been suggesting to lower expectations, pointing to the falling rail shipments of Bakken crude. Logistics is another major impediment to shale growth. There are already indications that rail transportation of the very light, high volatility and high vapour pressure Bakken crude oil could be running into difficulties.

When a senior North Dakota Republican (Robert Harms) feels oil production developments are going too fast, production activities in the state could be slowed down for safety reasons deduces Frisch.

And in order to maintain output, producers would need to keep adding wells on a regular basis. The IEA points out that the US shale industry will need to bring 2,500 wells into service every year to sustain the output-of 1 million barrels a day--of one of its main oil reserves, in North Dakota. This is an awesome task.

Shale revolution needs to be on a regular watch. Unjust euphoria would only hurt investments in other energy rich regions, including the strategically important Middle East, one can’t resist cautioning.

Published in Dawn, July 27th, 2014