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A boom in shale oil production will raise U.S. domestic crude output by a fifth over the next decade, helping to slash the country’s dependence on foreign oil imports, the U.S. Energy Information Administration said on Monday.

Growing shale production as well as Gulf of Mexico development will push U.S. crude oil production to 6.7 million barrels per day in 2020, up 20 per cent and 11 per cent higher than the previous forecast, the EIA said in its annual domestic energy outlook.

That would mark the highest level of U.S. oil output since 1994, thanks to advances in drilling techniques that have opened the door to tapping the nation’s vast shale reserves.

Shale oil production makes up 21 per cent of output in the Lower 48 states in 2010. By 2035, such production will account for 31 per cent of that output.

While oil production is expected to slow after 2020, output will remain above 6.1 million bpd through 2035, the EIA said.

U.S. oil imports are expected to drop to 36 per cent of total consumption by 2035, down from 49 per cent in 2010 as production rises and modest economic growth plus higher vehicle efficiency standards cut into demand, according to the EIA report.

The EIA did not factor in the newest proposed efficiency standards for vehicles from 2017 to 2025, which the agency said could reduce demand for oil imports even further.

The surge in shale oil production will not be affected much by the Obama administration’s decision to reject TransCanada’s Keystone XL pipeline, EIA head Howard Gruenspecht said.

Oil drillers had looked to the project, who’s future is now uncertain, to help move oil produced from shale resources.

“Given the prices projected in the report, we don’t think that production is dependent any particular pipeline,” Gruenspecht said at an event unveiling the report.

Despite significantly lowering its estimate for U.S. shale gas reserves, the EIA said the United States will produce 7 per cent more natural gas between 2010 and 2035 than previously projected.

The EIA’s estimate for unproved technically recoverable shale gas in the United States is now 482 trillion cubic feet, down from the 827 tcf estimated in last year’s report.

U.S. natural gas output is projected to hit 27.9 tcf in 2035, up from 21.65 tcf in 2010.

Strong natural gas output will fuel exports of liquefied natural gas, with the United States becoming a net exporter of LNG in 2016 at a capacity of 1.1 billion cubic feet, the EIA said. LNG export capacity is expected to rise by an additional 1.1 bcf in 2019.

Reuters, 23 January 2012