The United States’ shale oil and gas boom has catapulted the country into global energy prominence. The International Energy Agency estimates the U.S. could become the world’s biggest oil producer by 2020, and others are saying it will be closer to 2017.
Experts have realized the potential for decades, but extraction was difficult and expensive. Not until modern technology and drilling techniques that include horizontal drilling and hydraulic fracturing, or fracking, was it all possible.
The U.S. is producing its highest output level since 1992, threatening the strong hold held by the Organization of Petroleum Exporting Countries (OPEC).
My San Antonio reports:
The United States pumped 7.06 million barrels a day in the week ended Feb. 8, up 1 percent from the previous week and extending last year’s 19 percent gain, the Energy Information Administration said this week. OPEC production fell to the lowest level in a year in January, the Paris-based International Energy Agency said in its monthly report, which also came out this week.
U.S. crude imports have fallen 5.9 percent so far this year, extending a 21 percent decline last year, according to data from the EIA, the statistical arm of the Energy Department. The U.S. met 84 percent of its energy needs in the first 10 months of last year, on pace to reach the highest annual rate of self-sufficiency since 1991.
At the current rate of production, the U.S. continue to rely less and less on OPEC.
Domestic production has also held U.S. oil prices at bay, giving U.S. refiners leverage, and at the same time seeing the country become a leading exporter of refined petroleum products like gasoline and diesel.
Ed Morse and analysts at Citigroup said in a report, as reprinted by My San Antonio, “The United States should see its role in the world as a singular superpower enhanced and prolonged.”
Competition is heating up globally, and as the U.S. takes off, OPEC nations are left scrambling to find ways to maintain their positions.
Canada and Mexico are also compounding the pressure on OPEC to seek out new oil markets, solidifying North America as a whole, independent from OPEC.
“It changes the political dynamics between the U.S. and OPEC,” said Andy Lipow, president of Lipow Oil Associates in Houston, to My San Antonio.
Nigeria, Africa’s biggest oil producer, may be in most imminent danger from U.S. oil production. As the U.S. has favored domestic oil, imported Nigerian oil has dropped to a five-year low, effectively pushing Nigeria from fifth to sixth among major suppliers to the U.S., Platts reports
But it comes as no surprise; Nigeria has been warned in the past that one day in the near future it would need to find different markets for crude oil.
And one other problem—oil theft, or bunkering, as it is known in Nigeria—has been a major blow to the oil industry. According to Platts, it is estimated that $7 billion a year is stripped from the nation due to bunkering; its output is far from its maximum capacity of 3.2 million barrels per day because of this, instead only coming in around 2 million barrels per day while creating insecurity throughout the region.
Nigerian President Goodluck Jonathan has sought council from world leaders, including UK Prime Minister David Cameron, to help shed light on the matter.
While seeking out new oil markets and dealing with the constant threat of bunkering, Nigeria also has concerns with its four refineries—all of which are in dire need of repair. Repair will take place on one starting in May.
Unfortunately, none of the four refineries have ever produced at the full capacity of 445,000 barrels per day, Platts reports, either because of failure or pipeline sabotage.
Despite mounting problems, and without many answers or direction, Nigeria is working to remain competitive. The nation will most likely turn to Asian oil demand, as could other members of OPEC.