According to a forecast released on Monday by the International Energy Agency (IEA), the United States will become the world's largest oil producer by 2020, overtaking Saudi Arabia as it harnesses the power of new technologies in oil production.
The IEA forecasts that the US will become the world's top producer of oil by 2020 and a net exporter of fuel by 2030 and nearly self-sufficient in energy production by 2035.
In its annual World Energy Outlook report, the IEA said the global energy map "is being redrawn by the resurgence in oil and gas production in the United States" due mostly to the unlocking of hydrocarbon resources in shale and other tight rock formations using new technologies such as hydraulic fracturing (fracking) and horizontal drilling.
The Paris-based IEA projects that by 2015, US oil production will increase to 10 million barrels per day and to 11.1 million bpd by 2020, compared to 8.1 million barrels in 2011, according to The Wall Street Journal. The projected US production level for 2020 outstrips both Saudi Arabia and Russia, first and second-place producers respectively. The forecast says that the US will be a net exporter of oil by 2030.
Offshore platform located in the Gulf of Mexico, port location Cd. Del Carmen.
The Wall Street Journal compares the IEA figures to those published by Washington's Energy Information Administration (EIA). The IEA projection of US oil production at 11.1 million bpd by 2020 is higher than the EIA's forecast of 10.73 million bpd.
The US EIA says that US oil production in 2020 will be higher than Russia's output, projected at 10.54 million barrels a day.
IEA's World Energy Outlook report also projected that the increase in oil and natural gas production due, partly, to increased shale gas production and more efficient use of energy, will position the US to become nearly self-sufficient in energy production around 2035. However, the reports says US oil production will decrease from 11.1 million bpd in 2020 to 10.2 million bpd by 2030, while Saudi Arabia's production will outstrip US at 11.4 milion bpd.
By 2035, US production will drop further to 9.2 million bpd, below Saudi Arabia's 12.3 million bpd. Iraq's production will outstrip Russia's, making the country the world's second largest oil exporter.
IEA forecast says that by 2035, real oil prices will reach $125 a barrel. By 2035, US will no longer rely on foreign energy, IEA says. The forecast forsees that at this stage, the global energy economy will undergo a "sea change," with nearly 90 percent of Middle Eastern oil exports going to Asia.
The US, being able to meet its energy needs by 2035, will represent "a dramatic reversal of the trend seen in most other energy-importing countries." The report added: "Energy developments in the United States are profound and their effect will be felt well beyond North America — and the energy sector." According to the report, increasing US oil and gas production is "steadily changing the role of North America in global energy trade."
As the US becomes self-sufficient in oil production, and with more oil exports from the Middle East going to Asia, there will be an increased focus on the security of strategic routes to Asian markets. This may lead to major Asian powers such as China and India seeking to assert themselves as maritime powers.
The IEA report says further that unfolding global trends in the energy markets will be influenced by countries ending reliance on nuclear power and adopting wind and solar technologies. However, fossil fuels will continue to exceed renewable energy sources, IEA says. But "green power" will emerge as the second-largest source of power by 2035. The scenario, however, depends "critically on continued subsidies” for wind, solar and bio-fuel technologies, which, in 2035, amounted to about $88 billion in 2011 and may reach $4.8 trillion by 2035.
The agency's reports said that despite the increasing use of low carbon energy sources, large subsidies will sustain the dominance of fossil fuel "in the global energy mix." The report added: "Taking all new developments and policies into account, the world is still failing to put the global energy system onto a more sustainable path."
Global energy needs are forecast to increase by one-third by 2035. About 60 percent of the increase in demand is projected to come from China, India and the Middle East. Global production will rise to 99.7 million bpd from 87.4 million in 2011. China’s demand will increase by 60% over the period, while India's is expected to more than double. Developing countries will increase their demand by only 3%.
Carbon dioxide emissions related to energy consumption will rise, causing a long-term average temperature increase of 3.6 degrees Celsius.