While the media fixates on the political spin around the Obama government's rejection of TransCanada's Keystone XL pipeline, there's another, more important element to this story that has been grossly underplayed: growing domestic U.S. oil production, which will slash U.S. dependence on imported oil in the years ahead.
After decades of decline, U.S. oil output is growing rapidly again, thanks to the use of fracking (hydraulic fracturing) technology to open up previously untapped tight oil or shale oil deposits. (So much for Peak Oil theory.)
Some analysts say North Dakota's Bakken field alone - where output has doubled to more than 500,000 barrels a day over the past two years - could produce as much as one million barrels a day in a few short years.
That's nearly as much oil as the U.S. now imports from Mexico (its third-largest source of foreign crude, behind Canada and Saudi Arabia), and almost half as much as the 2.3 million barrels a day the U.S. currently imports from The Great White North, the top foreign supplier.
Robert Johnston, director of global energy and natural resources at New York-based Eurasia Group, a geopolitical analysis and consulting firm, told attendees at the annual Industrial Heartland Association conference in Edmonton that he sees growing production of shale oil (not just in the U.S., but globally) as a ``sleeper'' issue that could have a huge impact on world oil markets in the years ahead.
Now, British Petroleum is weighing in on the topic. In its annual global energy outlook, it says U.S. demand for oil imports is likely to fall sharply in the years ahead, as it moves toward energy self sufficiency over the next 20 years.
``The U.S. is on a path that will greatly reduce its demand for oil imports,'' Christof Ruehl, BP's chief economist, told reporters Wednesday, according to a story in the Financial Times.
``The company's message will be music to the ears of U.S. policymakers, who have long pursued the goal of `energy independence' and sought to free the country from its reliance on imports of crude from volatile countries in the Middle East,'' the FT story says.
``The U.S. has long known it is sitting on potentially huge reserves of unconventional shale gas . . . (and now) the widespread use of hydraulic fracturing - in which huge volumes of water and chemicals are injected at high pressure into dense shale rock to release the hydrocarbons trapped there - has unlocked the supplies. Over the past few years production has soared, and in 2010 the U.S. overtook Russia to become the world's biggest natural gas producer.''
Now that fracking is being used to ramp up production of shale oil as well as shale gas, BP says the volume of oil imports in the U.S. is on track to fall below levels seen in the 1990s, while the U.S. moves toward becoming a net exporter of natural gas in the years ahead.
The shrinking U.S. market for foreign sources of energy has long been apparent on the natural gas side, where domestic U.S. shale gas production has soared, and natural gas prices have plunged to decade lows, leaving Alberta producers in an increasingly desperate situation.
Now, producers who have long viewed the U.S. oil market as virtually insatiable are waking up to the fact that the U.S. may not need foreign oil as much as once thought. And that may one of the reasons ( besides rabid opposition by environmental groups, who are among Obama's core supporters) why the U.S. State Department has felt no urgency to approve Keystone XL.
It's a far different story in Asia, of course, where demand for energy of all kinds will continue to soar, according to BP's 20-year forecast. (Which explains why Enbridge's proposed Northern Gateway pipeline to the West Coast is now viewed by the Harper government as an essential piece of national energy infrastructure.)
``By 2030 China and India will be the world's largest and third-largest economies and energy consumers, jointly accounting for about 35 per cent of global population, GDP (Gross Domestic Product) and energy demand,'' the report says.
``Rapid economic development means industrialisation, urbanisation, and motorisation. Over the next 20 years China and India combined (will) account for all the net increase in global coal demand, 94 per cent of net oil demand growth, 30 per cent of gas and 48 per cent of the net growth in non-fossil fuels.''
No, that's not a typo. Let me repeat that: over the next 20 years, BP says China and India will account for 94 per cent of the net worldwide increase in oil demand.
At the moment, about 97 per cent of Canada's crude oil exports go to the U.S. Virtually no Canadian crude makes its way to any other markets, including China or India. Now that's what you call a mismatch between supply and demand.
Put differently, unless Canada as a country can get its act together and find a way to export crude to Asian markets in significant volumes, this country is likely to lose a key source of national wealth generation for generations to come. Let's hope taxpayers in all 10 provinces - not just Alberta - can understand what that means.
Edmonton Journal
Posts
No comments:
Post a Comment