US to over­take Saudi Ara­bia's oil pro­duc­tion by 2020

The Pak Banker - - Front Page -

NEW YORK

The US. will sur­pass Saudi Ara­bia in oil pro­duc­tion in the next decade, tak­ing the world's big­gest con­sumer al­most self-reliant in en­ergy, the In­ter­na­tional En­ergy Agency said.

Grow­ing sup­ply of crude ex­tracted from ``tight'' un­der­ground rock for­ma­tions will trans­form the U.S. into the world's largest oil pro­ducer by about 2020, last­ing un­til the mid­dle of that decade, the Paris-based ad­viser said to­day in its an­nual World En­ergy Out­look, which projects en­ergy trends through 2035. New do­mes­tic sources will curb im­ports and turn North Amer­ica into a net ex­porter by about 2030, the agency said.

The U.S. met 83 per­cent of its en­ergy needs in the first six months of this year, on track to be the high­est an­nual level since 1991, ac­cord­ing to En­ergy Depart­ment data.

"The United States, which cur­rently im­ports around 20 per­cent of its to­tal en­ergy needs, be­comes all but self­suf­fi­cient," the IEA said. That's "a dra­matic re­ver­sal of the trend seen in most other en­ergy-im­port­ing coun­tries."

The US met 83 per­cent of its en­ergy needs in the first six months of this year, on track to be the high­est an­nual level since 1991, ac­cord­ing to En­ergy Depart­ment data. Ris­ing do­mes­tic pro­duc­tion cuts the coun­try's de­pen­dence on for­eign oil and in­su­lates it from sup­ply dis­rup­tions abroad.

The Euro­pean Union banned oil im­ports from Iran in July over the na­tion's nu­clear pro­gram, re­duc­ing ship­ments from a coun­try that was un­til then the sec­ond­biggest pro­ducer in OPEC.

Global de­mand for oil is pro­jected to rise to 99.7 mil­lion bar­rels a day in 2035, up from 87.4 mil­lion last year, ac­cord­ing to IEA, which ad­vises 28 in­dus­tri­al­ized nations in­clud­ing the US, Ger­many and Ja­pan.

Saudi Ara­bia pumped 9.8 mil­lion bar­rels of oil a day last month, ac­cord­ing to data com­piled by Bloomberg. U.S. out­put was 6.7 mil­lion bar­rels a day in the week ended Nov. 2, ac­cord­ing to the En­ergy Depart­ment. The U.S. is de­vel­op­ing so-called tight oil re­serves in­clud­ing the Bakken shale for­ma­tion, which are ex­tracted by hy­draulic frac­tur­ing or hor­i­zon­tal drilling.

The agency's mem­bers will prob­a­bly pay about $125 a bar­rel for im­ported oil by 2035, com­pared with Brent crude prices near $108 a bar­rel on Lon­don's ICE Fu­tures Europe ex­change at the end of last week. The North Sea grade peaked at a record $147.50 a bar­rel in July 2008 be­fore tum­bling to about $46 that De­cem­ber, and has gained in each of the three years since then.

Ef­forts by global pol­i­cy­mak­ers to pro­mote en­ergy ef­fi­ciency are "dis­ap­point­ingly slow" and fall­ing short of their eco­nomic po­ten­tial, the agency said. In­creased en­ergy-sav­ing mea­sures could cut world­wide oil de­mand by al­most 13 mil­lion bar­rels a day by 2035, or the cur­rent com­bined out­put of Rus­sia and Nor­way.

Put an­other way, were ef­fi­ciency mea­sures sug­gested by the IEA en­acted in full, the in­crease in world en­ergy de­mand over the pe­riod would be cut in half.

Nat­u­ral gas con­sump­tion will rise in the fore­cast pe­riod, driven by China, In­dia and the Mid­dle East. "In the United States, low prices and abun­dant sup­ply see gas over­take oil around 2030 to be­come the largest fuel in the en­ergy mix," ac­cord­ing to the re­port, writ­ten by a team of re­searchers led by IEA Chief Econ­o­mist Fatih Birol.

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