IEA: Global economy to rely on U.S. shale production
The world will increasingly depend on U.S. shale production to supply the crude oil needed to meet modest global demand growth, the International Energy Agency said in a new report.
The World Energy Outlook report focuses on the shift from oil to electricity that will power the global economy. As a result, crude’s market share will continue to shrink, but the United States will be leaned on to supply more than half of global oil and gas production growth at least through 2025.
As much as 75 percent of global oil production growth could come from the U.S. in the years ahead, meaning increasing volumes of crude would be exported around the world from port hubs in the Houston and Corpus Christi areas.
“The shale revolution continues to shake up oil and gas supply, enabling the United States to pull away from the rest of the field as the world’s largest oil and gas producer,” the report said.
Driven by West Texas’ booming Permian Basin, the United States has emerged this year as the world’s top oil producer — the nation already churned out the most natural gas. U.S. oil production, which reached an estimated 11.6 million barrels of crude a day as of last week, accounts for more than 10 percent of the world’s supplies, and that should jump to nearly 20 percent by 2025, the IEA said.
But over-reliance on American oil could trigger a supply crunch in the years ahead, which would lead to higher oil and fuel prices, the IEA warned. Oil production in shale formations declines at a faster rate than in conventional wells, but energy companies are not investing in developing enough other oil and gas fields.
“Our projections already incorporate a doubling in U.S. tight oil from today to 2025, but it would need to more than triple in order to offset a continued absence of new conventional projects,” the report added.
Most of the world’s energy growth outside of the United States is expected to focus on renewable energy and natural gas, the report said.
By 2040, global electricity demand could nearly double while oil demand will grow only about 10 percent — if it grows at all. The IEA’s environmental sustainability scenario — the possible future that sees countries working more aggressively to combat climate change — sees oil consumption declining by 2040. Nearly half of the global vehicle fleet could be electric by 2040, the IEA projected.
Crude oil use for automobile fuel will peak in the mid-2020s, but petrochemical demand for oil will keep rising, as will crudebased fuels for trucks, planes and ships.
It’s anticipated that renewable power will surpass coal in the global power mix. Renewable energy’s share is expected to rise from 25 percent to 40 percent in 2040 as coal continues to lose ground. Solar power growth is expected to surpass wind in the coming decades. Solar alone would move past coal by 2040.
Still, without new governmental policies around the world, the report warned that carbon emissions will keep growing through 2040, contributing to climate change and falling short of the goals established in the recent Paris climate accord.
Gobal trade in liquefied natural gas is expected to more than double to supply developing nations, especially China. Several LNG export projects are in construction or planned along the Texas and Louisiana Gulf Coast.
Global energy demand overall will continue to be led by Asian nations. In 2000, more than 40 percent of global energy demand came from Europe and North America, with about 20 percent from developing economies in Asia. By 2040, the positions are likely to be reversed, according to the IEA. China already leads the world in global demand, and both India and Africa will surpass the European Union by 2040.
U.S. oil production accounts for more than 10 percent of the world’s supplies, and that should jump to nearly 20 percent by 2025, according to a new IEA report.