Reversing Global Energy Flow
“Rigzone” recently reprinted an opinion piece by John Kemp of Reuters. Kemp maintains that thanks to the shale revolution and improved automotive fuel efficiency, the global flow of energy has reversed. Net imports of crude oil into the U.S. were 11.2 million barrels of oil per day (bopd) at the beginning of 2009. However, by the start of 2014 this figure had dropped to 5.2 million bopd, a decrease equal to the entire daily crude exports of Saudi Arabia.
Historically, the biggest suppliers of crude to the U.S. have been Canada, Saudi Arabia and Mexico, and imports from these countries have not diminished. However, imports from the rest of the Middle East, West Africa and Latin America are all down, forcing these suppliers to look to Asia for markets.
The North American energy revolution, in conjunction with rapid industrialization in Asia, has reversed the traditional energy flow from East to West to West to East.
Historically the marginal sources of production have been the Middle East, Africa and Latin America where investment and production are tightly controlled by governments. As a result of the shale revolution, Texas, Oklahoma, North Dakota, and other states where production is driven by the private sector, are now the marginal sources of production. New technologies (horizontal drilling, hydraulic fracturing, more sophisticated use of seismic data, etc.), specialized crews and equipment, small entrepreneurial oil operators, and private mineral rights have all contributed to this shift.
Kemp concludes “If the four decades from the 1970’s to 2000’s were the era of the Middle East and OPEC, the next two decades will be the era of North America and shale.”
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/132490/Kemp .