IEA: United States to Dominate Global Oil, Natural Gas Growth Through 2025
The International Energy Agency (IEA) released its annual World Energy Outlook today, with the report showing the United States poised to lead in the effort to fill the growing global energy demands. Forecasting global energy production and consumption through 2040, the IEA projects the U.S. will account for nearly 75 percent of global oil growth, and 40 percent of natural gas growth through 2025.
Shale development across the country – “relentless shale development,” according to the Wall Street Journal – is driving production to record levels, and has allowed the United States to emerge as the world’s leader in both natural gas and crude oil production. The incredible impact continued development will have on the global market was highlighted by the agency in its report:
“The shale revolution continues to shake up oil and gas supply, enabling the U.S. to pull away from the rest of the field as the world’s largest oil and gas producer. By 2025, nearly every fifth barrel of oil and every fourth cubic meter of gas in the world come from the United States.”
The IEA report shows the demand for oil in the global market is growing, and as the agency noted last month, “there is no peak in sight for demand either.”
In the IEA’s New Policies scenario — which the agency considers the most likely set of circumstances as it follows existing climate policies and assumes adherence to declared policy intentions are followed through on – oil demand grows by around 1 million barrels per day (mb/d) on average each year to 2025.
To meet the growing demand, IEA projects the U.S. will continue to increase production of its shale resources and increase its share of the market – further bolstering its recent gains as an oil exporter:
“On the supply side, the United States provides nearly 75% of the increase in global oil production to 2025.
“Increases in tight oil production lead the United States to become a net oil exporter in the early 2020s. As a result, North America becomes the world’s third-largest oil exporting region by 2040. Robust production growth in Brazil increases Central and South America’s net exports after 2025. Russia’s net exports decline steadily as a result of waning production.”
As EID recently covered, the IEA report reiterates its findings in a previous report, pointing to the petrochemical industry as the driving factor in the increasing global demand for oil in the future:
“Demand for petrochemical feedstocks (ethane, liquefied petroleum gas [LPG] and naphtha) and for kerosene increases by 1.6% per year to 2040. This is almost three-times the rate of growth in total liquids demand.”
This scenario is a win-win for the United States: the growth in petrochemical sector is helping to drive up demand for domestic energy production, while our abundant supply of oil and natural gas liquids is also simultaneously drawing massive investments from the industry at the same time.
In the 2017 World Energy Outlook, the IEA projected global natural gas use would increase 45 percent by 2040. This year, the projection was revised upward by almost 100 billion cubic metres. Under the New Policies Scenario, natural gas is the fastest growing fossil fuel, becoming the second-largest source of energy after oil in 2030. The report forecasts demand growing by 1.6 percent per year, with natural gas consumption almost 45 percent higher in 2040 than today.
Since 2009, the U.S. has held the top spot as the world’s largest natural gas producer, a perch the IEA notes we will retain for the foreseeable future:
“The United States is the largest gas producer today and remains so throughout the outlook period. In the late 2020s, the country produces a third more gas than the next largest producer (Russia).”
Given the prolific natural gas production coming from the Appalachian, Permian and Haynesville shale plays, it is perhaps not surprising the IEA is projecting the United States will account for such a massive share – 40 percent of total gas production growth, according to the report – to 2025.
Demand for natural gas has been rising across the world, as countries look to secure access to a cleaner, affordable energy supply. The demand for gas has led to the rise of liquid natural gas (LNG) exports, creating a new market in the process:
“Surging growth in global gas trade – underpinned by the shale revolution in the United States and the rise of liquefied natural gas (LNG) – continues to accelerate the transformation of gas markets.
“Growth in global gas trade comes mostly from LNG, with its share swelling from 42% to almost 60% by 2040.”
Last year, the U.S. quadrupled its LNG exports from the previous year, exporting 1.94 billion cubic feet per day. A number of new LNG projects, in various stages of development, are set to come online in the coming years. These new terminals will have the capacity to double exports, furthering the ability to take advantage of our resources and the growing market.
As it did the year before, and the year before that, this year’s World Energy Outlook goes a long way to showcase America’s standing as a global energy leader. Given its findings, the United States looks poised to lead, and meet the world’s demands for the foreseeable future.