The U.S. will surpass Saudi Arabia in oil production in the next decade, making the world’s biggest consumer almost self-reliant in energy, the International Energy Agency said.
Growing supply of crude extracted from “tight” underground rock formations will transform the U.S. into the world’s largest oil producer by about 2020, lasting until the middle of that decade, the Paris-based adviser said today in its annual World Energy Outlook, which projects energy trends through 2035. New domestic sources will curb imports and turn North America into a net exporter by about 2030, the agency said.
“The United States, which currently imports around 20 percent of its total energy needs, becomes all but self- sufficient,” the IEA said. That’s “a dramatic reversal of the trend seen in most other energy-importing countries.”
The U.S. met 83 percent of its energy needs in the first six months of this year, on track to be the highest annual level since 1991, according to Energy Department data. Rising domestic production cuts the country’s dependence on foreign oil and insulates it from supply disruptions abroad. The European Union banned oil imports from Iran in July over the nation’s nuclear program, reducing shipments from a country that was until then the second-biggest producer in OPEC.
Global demand for oil is projected to rise to 99.7 million barrels a day in 2035, up from 87.4 million last year, according to IEA, which advises 28 industrialized nations including the U.S., Germany and Japan.
Saudi Arabia pumped 9.8 million barrels of oil a day last month, according to data compiled by Bloomberg. U.S. output was 6.7 million barrels a day in the week ended Nov. 2, according to the Energy Department. The U.S. is developing so-called tight oil reserves including the Bakken shale formation, which are extracted by hydraulic fracturing or horizontal drilling.
The agency’s members will probably pay about $125 a barrel for imported oil by 2035, compared with Brent crude prices near $108 a barrel on London’s ICE Futures Europe exchange at the end of last week. The North Sea grade peaked at a record $147.50 a barrel in July 2008 before tumbling to about $46 that December, and has gained in each of the three years since then.
Efforts by global policymakers to promote energy efficiency are “disappointingly slow” and falling short of their economic potential, the agency said. Increased energy-saving measures could cut worldwide oil demand by almost 13 million barrels a day by 2035, or the current combined output of Russia and Norway. Put another way, were efficiency measures suggested by the IEA enacted in full, the increase in world energy demand over the period would be cut in half.
Natural gas consumption will rise in the forecast period, driven by China, India and the Middle East.
“In the United States, low prices and abundant supply see gas overtake oil around 2030 to become the largest fuel in the energy mix,” according to the report, written by a team of researchers led by IEA Chief Economist Fatih Birol.
Iraq will be the biggest contributor to new oil supplies, raising production to 6 million barrels a day by 2020. By 2035, the nation’s output rate will rise to more than 8 million, overtaking Russia to become the world’s second-largest exporter, the IEA said. The country pumped 3.4 million barrels a day last month, making it the second-largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, according to Bloomberg estimates.
The forecasts for Iraq, a special focus of this year’s IEA outlook, were previously published on Oct. 9.
In emerging nations, government subsidies will continue to spur the use of fossil fuels, even as lower-carbon energy sources become more popular. State subsidies cost $523 billion last year, up almost 30 percent from 2010. Subsidy programs, which remain most prevalent in the Middle East and North Africa, have become more expensive because of higher oil prices, the agency said.