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Fracking revolution puts America on course to export oil

Robin Pagnamenta, Deputy Business Editor

November 14 2017, 12:01am, The Times

Crude oil is extracted from the Monterey Shale formation near Bakersfield, CaliforniaALAMY

The fracking revolution has put the United States on track to become a net oil exporter by the late 2020s, ending the country’s decades-long addiction to energy imports.

In its annual World Energy Outlook, which is being released today, the International Energy Agency says that new technology and drilling methods to extract oil and gas are helping to propel America to a level of output 50 per cent higher than any other country has managed.

“The US is turning into the undisputed global leader for oil and gas,” Laura Cozzi, head of the IEA’s energy demand outlook division, said.

Ten years ago, the US was importing 14 million barrels of oil and gas equivalent per day and it was widely thought that the country’s reliance on imported oil would only continue to increase in future.

Instead, according to the IEA’s projections, by the mid-2020s the United States is set to become the world’s largest liquefied natural gas exporter and a few years later a net exporter of crude oil.

The IEA expects combined overall US oil and gas production to reach a plateau above 31 million barrels of oil equivalent per day in the 2030s, up from 24 million barrels today.

This huge spurt is being driven by colossal investments in shale projects in the Midwest, the Appalachian mountains and Texas. Since 2010, nearly $1 trillion has been poured into US oil and gas projects, with an additional $200 billion spent on pipelines, transport and processing facilities.

US oil and gas production Shale gas Tight oil Natural gas liquids Oras Other ol 35 30 20 8 10 S 1980 990 2000 2010 2020 2030 2040

“In our projections, the eight million barrel per day rise in US tight oil output from 2010 to 2025 would match the highest sustained period of oil output growth by a single country in the history of oil markets,” the IEA says, citing the “energy renaissance” under way in the country.

“Expansion on this scale is having wide-ranging impacts within North America, fuelling major investments in petrochemicals and other energy- intensive industries.”

It adds that America’s shift away from imports also is being driven by rising electricity production from renewables, including solar and wind, continued improvements in vehicle fuel efficiency standards and the steady rise of electric vehicles, natural gas and biofuels.

By contrast, the IEA expects China to become an increasingly big importer of fossil fuels over the same period as it looks overseas to meet its rising domestic energy demand.

“By 2040, 70 per cent of the world’s oil trade ends up in a port in Asia, as the region’s crude oil imports expand by a massive nine million barrels per day. The shifting pattern of risks implies a significant reappraisal of oil security and how best to achieve it.”

In a further reversal of western dependency on imports from the Middle East, the IEA notes that while the Persian Gulf will remain a big player in the global oil trade, it is emerging as something else: a heavyweight oil and gas consumer.

Ms Cozzi said that the Middle East was “on track to become the largest oil and gas consumer after the US and China”.

The trend is reordering international trade flows and challenging incumbent suppliers and business models.

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