Abundant supplies of natural gas — unlocked by hydraulic fracturing and horizontal drilling — are helping to lower home heating bills, create millions of jobs, boost American manufacturing, and deliver tangible environmental benefits. And yet for all of the known benefits of shale, the scale of its transformative power may not have been fully understood until this week.
In a historic moment for American energy, a leader from the United Arab Emirates — a member of OPEC — announced that the UAE is “seriously thinking” of importing North American natural gas. As Reuters reports:
“The United Arab Emirates, a Gulf OPEC oil producer, said it was looking at the possibility of importing natural gas from North America, in what would be one of the most striking developments since the start of the U.S. shale boom. The United States and Canada are producing record amounts of gas from shale rock formations, pulling down North American prices to levels that have attracted the interest of foreign buyers.” (emphasis added)
This news comes on the heels of other major announcements for American energy output. As a recent report from the Independent Petroleum Association of America (IPAA) highlights, the increase in American natural gas production has helped to reduce net import reliance for natural gas from 16 percent of domestic consumption in 2005 to just six percent in 2012. As for oil, the International Energy Agency (IEA) recently reported U.S. production is on a “relentless rise.” From CBNC:
“As the U.S. looks toward a future of energy independence, the IEA noted that U.S. crude output for 2013 outstripped its projections from a year ago by around 455 kb/d, and noted that ‘U.S. crude oil supply in 2013 registered the fastest absolute annual supply growth of any country in the last two decades, rising 15 percent in 2013.’ This helped blunt the impact of supply declines elsewhere, notably Libya and Iran.” (emphasis added)
Earlier IEA reports from August 2013 made similar findings, stating oil output from American shale plays was a “defining feature of tomorrow’s market.” As reported in CNBC, “the rise of North American oil supplies could test the future of OPEC which may have to curb supply to accommodate rising shale oil volumes.” IEA’s report also predicts North America will provide 40 percent of new oil supplies by 2018, while the contribution from OPEC will slip to 30 percent.
As the New York Times recently reported, development of America’s shale resources has tangible energy security benefits for the nation, which translate to positive impacts for American consumers by “providing a level of supply security and price regularity for the global oil market.” One thing, however, is clear: North American shale development is curbing imports from OPEC, sending a clear signal to the global market that American energy is here to stay. The fact that OPEC countries are now looking to import energy from the United States demonstrates just how big of a game changer shale has been.