U.S. leads world in oil and gas production, IEA says

Marco Green
November 14, 2017

The largest disruptive force to supply will be shale production in the U.S. - the IEA estimates USA crude oil will reach peak output in the 2020s of around 17m bpd.

"Oil is already facing stiff competition from ever-cheaper and more environmentally friendly energy sources as traditional fossil fuel users switch to cleaner, low-carbon alternatives", IEA said in its World Energy Outlook 2018.

The U.S. surpassed Russian Federation in 2011 to become the world's top producer of oil and gas, with a current daily output of 24 million barrels. That "will bring a lot of dollars to US business".

It's a revolution powered by one factor above all others: shale.

In its monthly oil market report, the Paris-based IEA cut its oil demand forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.

Oil inventories in the world's richest nations fell by 40 million barrels in September, breaking below 3.0 billion barrels for the first time in two years, driven in part by Hurricane Harvey, which shuttered much USA refining capacity in August. "The US becomes the undisputed leader for oil and gas production for decades, which represents a major upheaval for global market dynamics", said Dr Fatih Birol, IEA's executive director.

"Electric vehicles (EVs) are in the fast lane as a result of government support and declining battery costs but it is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keep pushing demand higher".

That will benefit the U.S.as it turns from imports to exports.

In Abu Dhabi on Monday, the UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazrouei, said that oil producers were expected to unanimously extend a production cut accord later this month, but its duration was still under discussion.

"There could be further surprises ahead", the IEA said.

Opec said in the latest edition of the World Oil Outlook forecasts that oil would supply just over 27 per cent of worldwide energy needs in 2040, while natural gas will see its share at slightly more than 25 per cent.

In the US, the report assumes that improvements in fuel economy standards for cars and trucks will help reduce demand for oil.

If the assumptions do hold, the US will find itself in a very rare position. "There's big growth coming from shale oil, and as such there'll be a big difference between the USA and other producers".

Other reports by Click Lancashire

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