Oil Cartel Publicly Admits American Shale Oil is King
After a century of dominance in the fossil fuel industry, traditionally mined crude oil has finally met its match.
Last week ConocoPhillips CEO Ryan Lance predicted North America — the birthplace and currently the most aggressive exploiter of shale oil and gas production — could be energy self-sufficient by the year 2025.
When this happens, it will mark a dramatic shift in the global energy balance... and the first time since the early 1990s that a majority of our fossil fuel supply didn't come from overseas sources.
While this may not exactly be earth-shattering news to people who follow the industry closely, it was last week's admission by the other side of the oil supply coin, namely OPEC, that has effectively put another nail in the coffin of traditionally-produced foreign crude.
In its annual World Oil Outlook report, OPEC analysts cut their forecast of global oil demand due, in large part, to an increased supply from nations outside the 12-member cartel infamously known for their stranglehold on traditional crude oil reserves.
You may recall my article last week. I talked about how Texas is now producing oil faster than three OPEC members... and is quickly closing in on four more.
For reasons more political than scientific, OPEC has been a holdout in acknowledging the importance — and eventual dominance — of shale oil and gas.
According to the report, by 2025 shale oil will contribute two million barrels per day to global supply — about the same as the national production level of OPEC member Nigeria, Africa's biggest oil producer.
Perhaps the most painful admission of all for OPEC is conceding that this new generation of oil will be coming exclusively from North American sources at least through the middle of the next decade.
Tempering this somber revelation, OPEC secretary General Abdullah al-Badri stated to reporters that his organization is not concerned about these changes in the supply chain, citing a growing global demand that will absorb the higher production rates without destabilizing prices.
But OPEC's own recent revisions in demand forecasts through 2016 indicate this confidence is more posture than concrete.
OPEC analysts have calculated spare capacity is expected to rise, reaching five million barrels per day by 2014 at the latest, with the gap growing even wider moving forward.
Supplying close to one-third of the world's oil and holding 80% of traditional crude reserves, this latest forecast paints a picture of decline for a multi-national economic structure which remains, as it has always been, reliant on the abundance of a single finite commodity.
However, what's bad news for OPEC may prove to herald a new golden age of energy abundance in the West...
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Citing recently updated geological surveys of U.S.-held shale formations alone, the Institute for Energy Research has placed total shale oil reserves as high as 2.6 trillion barrels — or close to ten times the total reserves of Saudi Arabia.
Previous estimates had pegged this total at 2.1 trillion barrels — still many times greater than necessary to permanently unseat OPEC as the single biggest name in the global oil supply game.
Although technological capability has yet to bring this massive potential to 100% production capacity, it is now clear beyond a doubt where the future of global fossil fuel power will migrate.
So, where does this leave us?
If the recent economic booms around the Williston Basin and Eagle Ford regions, the epicenters of the North American oil revival, are any indicator...
It puts us at the start of a very exciting and potentially lucrative period in American history.
Boasting a negative unemployment rate and a building boom to rival those that came with the first oil revolutions of the early 20th century, the North Dakotan mining industry provides us with a signpost of things to come.
Similar revivals are already taking shape as far east as Pennsylvania and Ohio, as well as up North in Alberta and Ontario.
If you haven't seen pictures of the shale oil boom in North Dakota and Texas, this is a great place to start.
Brian Hicks Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy and Capital. Known as the "original bull on America," Brian is also the author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century, published in 2008. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox, and countless radio shows. For more on Brian, take a look at his editor's page.
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy and Capital. Known as the "original bull on America," Brian is also the author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century, published in 2008. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox, and countless radio shows. For more on Brian, take a look at his editor's page.