IEA says U.S. to become world’s top oil producer by 2020

The International Energy Agency (IEA) has confirmed that the shale oil boom in the U.S. will make the country the world’s largest oil producer by 2020, surpassing Saudi Arabia, a radical shift that could drastically alter not just the world’s energy supplies, but also its geopolitics. The resurgence in oil and gas production in the U.S. causes the global energy map to be redrawn, the IEA added. This development runs in contrast with the prediction last year putting Russia and Saudi Arabia as contenders for the top position.
A new combination of technologies called hydraulic fracturing that unlocks hydrocarbon resources locked in shale and other tight rock has caused the major shift at a faster-than-expected rate.
By around 2020, when the United States is projected to become the largest global oil producer, its oil imports (currently at 20% of its needs) are expected to continually fall, and North America may be a net oil exporter by the year 2030. The Organization of Petroleum Exporting Countries (OPEC) has acknowledged that shale oil would significantly decrease the group’s share of the U.S. market. It predicts that the U.S. would import less than 2 million barrels per day (bpd) by 2035, almost three-fourths less than its current imports. However, OPEC says that its share of global production will still increase, much of it going to Asia; this could mean a redefinition of military alliances, since Asian nations will need to secure oil shipping lanes.
However, the IEA also warned about the downside risk from the emergence of shale gas as a game changer in global energy, saying that it would contribute to increased competition for water resources needed for energy projects. “Shale oil and gas are extracted by pumping water, sand and chemicals into the ground at high pressure to crack rocks open, a process known as hydraulic fracturing, or fracking, the IEA said. “But the intensive use of water will increasingly impose additional costs, and could threaten the viability of projects for shale oil and gas, and also biofuels.” (November 12, 2012)