Higher production and lower demand are driving the United States on the path to energy independence by 2025, according to Wood Mackenzie.
Higher production and lower demand are driving the United States on the path to energy independence by 2025, the first time since 1952 that the nation will export more energy than it imports, according to a recent Wood Mackenzie report.
“A country can achieve energy independence through two channels,” said James Brick, senior analyst with Wood Mackenzie, in an Oct. 23 press release regarding Wood Mackenzie’s integrated outlook by its Global Trends Service. “It can either produce more or consume less, and the United States is doing both.”
Over the past seven years, the United States has added 3 million barrels per day of tight oil and 27.5 billion cubic feet per day of shale gas to the world energy mix, a 42 percent increase in U.S. oil and gas production. At the same time, oil demand is decreasing, mainly due to efficiency gains in the transport sector.
U.S. oil production has increased thanks to exploration and production activities in unconventional oil plays such as the Bakken and Eagle Ford as well as activity in the Permian Basin. Crude oil production from the Bakken and Three Forks formations in North Dakota’s Williston Basin lifted the state’s crude oil production to a new record of more than 1 million barrels of oil per day in April and May of this year. In March, analysts estimated that Eagle Ford production would keep growing through this year. In July, the U.S. Energy Information Administration reported that the increase in Permian oil production since 2007 is positioning the basin as the largest U.S. crude producing region.
The end of the United States’ ban on crude oil exports, higher tight oil production and lower transport sector demand are key uncertainties that could accelerate U.S. energy independence. But energy independence could be stalled by delays in the development of critical export facilities, environmental regulations and energy policies designed to encourage gas to be consumed in the U.S. power sector, Wood Mackenzie said.
In general, upstream oil and gas companies would benefit the most from the end of the oil ban, while oilfield service and rig companies would benefit from additional investment.
“If crude oil exports resulted in U.S. producers receiving an additional $5 per barrel, production could increase by 350 to 450 thousand barrels per day,” Wood Mackenzie reported.
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