Is American Energy on the Verge of a New Golden Age?
The U.S. has been a net importer of energy since 1953, but that’s set to change early next decade, according to the Energy Information Administration (EIA). In its highly anticipatedAnnual Energy Outlook 2018,the agency forecasts that the U.S. will become a net exporter of energy by as early as 2022, thanks in large part to the boom in shale oil and liquefied natural gas (LNG) production as well as the relaxation of export restrictions. A “golden age of American energy dominance,” as President Donald Trump described it back in June, could be upon us sooner than anticipated, putting the U.S. on a path to dethrone Saudi Arabia and Russia as the world’s top oil powerhouse.
U.S. Forecast to Become a Net Exporter of Energy by 2022
The 40-year-old ban restricting U.S. oil exports was lifted in December 2015, and between then and October 2017, exports skyrocketed nearly 300%.
A U.S. Oil Export Boom 40 Years in the Making
This has galvanized shale producers into doubling their efforts to meet growing demand. Earlier in the month, I told you the U.S. producedmore than 10 million barrels of oil per dayin November for the first time since 1970. And in the week ended February 9, the number of active North American oil rigs rose sharply from 765 to 791, the most in nearly three years.
The EIA’s forecast is in line with those of independent analysts, who see the U.S., along with Canada, dominating global growth in well demand.
“North American shale activity is the primary mechanism driving growth globally,” writes energyconsulting firm Rystad Energyin its January global well market outlook. The group adds that the number of wells “completed in North America increased 40% in 2017, and we expect 11% average annual growth toward 2020.”
North American Shale Activity Expected to Drive Global Well Demand
From Texas ports, the U.S. now exports crude to as many as 30 countries, seizing valuable market share from members of the Organization of Petroleum Exporting Countries (OPEC). Since November, China has become the largest consumer of U.S. crude other than Canada, according to Reuters. (Last year, in fact, China surpassed the U.S. to become the world’s largest overall importer of oil.) And in a surprising move that shows how the rise of American shale is reshaping the global market, the United Arab Emirates, a significant oil producer in its own right, purchased 700,000 barrels of oil from the U.S. in December, Bloomberg reports.