Hydraulic Fracturing Slashes Demand for OPEC Oil
As Gasland-director Josh Fox continues his misinformation tour across the country, he’s certainly hoping his phony talking points will distract Americans from the reality of hydraulic fracturing: namely, increased energy security and a stronger economy. To wit: the Organization of Petroleum Exporting Countries (OPEC) is admitting that demand for its crude oil – long held as an economic weapon over the United States – will be significantly diminished next year. The key factor? Much to Josh Fox’s dismay, it’s the process he’s determined to stop: hydraulic fracturing, which has unlocked vast supplies of shale oil that otherwise would be unreachable.
Demand for OPEC’s crude will slip by 300,000 barrels a day next year to 29.6 million a day next year, or about 2.6 percent less than the 12-member group is pumping now, the organization said in its first set of forecasts for 2014. The need for OPEC’s crude will diminish even as global oil demand growth recovers to 1 million barrels a day in 2014, from 800,000 a day this year, amid rising output in the U.S. (DOETCRUD) and Canada.
“The strong growth trend seen in 2013 is expected to continue in 2014” for production from outside OPEC, the organization’s Vienna-based secretariat said in its monthly market report today.
Dependence on OPEC’s crude is slipping as the U.S. and Canada unlock unconventional oil supplies from deep underground shale deposits with new drilling techniques. Brent crude futures have slipped 2.7 percent this year, trading at about $108 a barrel on the London-based ICE Futures Europe exchange today, amid signs of slowing growth in China and uneven recovery in the U.S., the world’s biggest oil consumers.
This great news also comes on the heels of a report by the Energy Information Administration, which found that for the first time in 16 years, American crude oil production surpassed imports at the end of May. Additionally, the Paris-based International Energy Agency (IEA) revealed in May that a major increase in North American oil production is sending “shock waves” throughout global energy markets, a phenomenon that could lead to North American energy independence by 2035. As IEA executive director Maria van der Hoeven put it: “North America has set off a supply shock that is sending ripples throughout the world…A real game changer in every way.” IEA predicts that North America will provide 40 percent of new oil supplies by 2018, while the contribution from OPEC will slip to 30 percent. It’s not surprising, then, that one OPEC official has gloomily admitted: “Some member countries are really suffering from U.S. shale oil.”
It’s easy to see why. The U.S. Geological Survey has estimated that the Bakken Shale in North Dakota is twice as large as it had previously estimated in 2008, which was itself a 25-fold increase over the agency’s 1995 estimate. Meanwhile, the Eagle Ford Shale in Texas will soon be out-producing the Bakken. California has at least 15 billion barrels of shale oil in the Monterey Shale waiting to be tapped.
We’re only a few years into shale revolution, and it’s already got OPEC running scared.
This increased production has an added bonus: lower prices. Remember how elected leaders always told us that new drilling won’t impact oil prices because we’ll always be subjected to OPEC’s price fluctuations? As it turns out, U.S. oil prices have actually been kept in check because of our enormous domestic supply – another amazing benefit of shale development and hydraulic fracturing.