U.S. to become world’s top oil producer earlier than expected

U.S. to be world’s top oil producer earlier than expected

Pumpjacks on Lost Hills Oil Field, California.

United States’ shale boom is helping the country to surpass both Russia and Saudi Arabia to become the world’s top oil producer by 2015, two years earlier than previously predicted, according to the International Energy Agency (IEA).

In its yearly World Energy Outlook released Tuesday, the agency —the developed world’s most respected energy forecaster— says the rise of the U.S. as an oil superpower is one of the clearest signs yet of how the shale revolution is reshaping the global energy landscape.

It adds that booming output from shale formations will take the U.S. very close to be energy self- sufficiency in the next two decades.

However, it also warns that while technology and high prices are opening up new oil resources, it does not mean the world is on the verge of an era of oil abundance.

According to the agency, oil prices will advance to $128 a barrel by 2035 with a 16% increase in consumption, supporting the development of so-called tight oil in the U.S. and a tripling in output from Brazil.

But by 2020, the light, tight oilfields of North Dakota and Texas will be in decline, and the Middle East will reassert its dominance over oil markets, as other nations struggle to repeat North America’s success with exploiting shale deposits.

China and India top consumers

Practically all the globe’s surge in energy demand will occur outside the developed world, with India and the Middle East taking over leadership in growth from China after 2020.

“We have the tools to deal with such profound market change,” the agency’s executive director Maria van der Hoeven said in releasing the report in London.

“Those that anticipate global energy developments successfully can derive an advantage, while those that do not risk taking poor policy and investment decisions.”

She also said the agency expected regional differences in natural gas prices to remain. Cheap shale gas in the U.S. is encouraging energy-intensive industries to relocate there, and the IEA forecast that the European Union and Japan would lose a third of their share of exports of energy intensive goods.

Image from WikiMedia Commons