Record-Breaking U.S. Shale Production Delivers Global Benefits
Today the Center for Strategic and International Studies (CSIS) released its report: “New Energy, New Geopolitics: Balancing Stability and Leverage.” The findings underline how U.S. shale production is impacting energy, geopolitical, and national security dynamics around the world. Thanks to advancements in hydraulic fracturing and horizontal drilling, the United States has re-cemented itself as a global energy leader. From the report:
“In the last nine years, U.S. shale gas and tight oil production has skyrocketed. Between 2005 and 2014, U.S. production of crude oil and natural gas has risen by nearly 65 and 34 percent, respectively, due to tight oil and shale gas development. The shale gas supplies from
Pennsylvania alone equal the entire natural gas export capacity of Qatar, the world’s second largest natural gas exporter in 2012.2 And the increase from light tight oil production in places like North Dakota and Texas over the last five years is equivalent to Iraq’s current production levels.” (p.1)
Record levels of tight oil and natural gas production are not only creating jobs, bolstering local economies and cutting air emissions at home, but the development of our abundant energy resources is being felt across the globe. U.S. energy supplies are helping to stabilize global oil prices, and as CSIS reports, the “benefits thus far could pale in comparison to those that might arise in the future.”
Because of shale, the United States has already significantly changed worldwide energy markets and global trade. Simply put, the decreased demand in the United States for energy imports has led longstanding exporters to shift their trade flows, meaning the United States is having a major impact on the global oil equation – even as most oil exports are banned under U.S. law. CSIS highlights that in addition to rising U.S. exports of petroleum products, the United States is also attracting investment:
“The sudden surge in U.S energy supply and consequent reduction in natural gas prices have made North America among the most attractive and competitive places in the world to locate energy intensive endeavors.” (p. 2)
As far as the best pathway forward, given the United States’ fortuitous situation, CSIS recommends steering towards “energy-stability.” As CSIS describes it, the energy stability pathway:
“suggests the United States’ energy advantage should be used to enhance energy security around the world, on the theory that more stable energy markets will foster strong economies and enhance geopolitical stability.” (p.7)
In order to implement this approach, CSIS recommends a number of initiatives – including the further development, “beyond current activities,” of unconventional oil and gas abroad, as well as promoting flexible and global trade of energy resources.
The CSIS report coincides with the U.S. Energy Information Administration’s (EIA) most recent analyses that crude oil reserves in the United States at the start of 2013 reached their highest levels since 1976. Furthermore, the annual increase in 2012 of 4.5 billion barrels is the largest since 1970 (after 10 billion barrels of Alaskan crude were added to U.S. proved reserves). According to the EIA:
“Tight oil plays, which contain conventional oil in reservoirs of low permeability that is accessed through advanced drilling techniques, accounted for 7.3 billion barrels (22% of the U.S. total) of proved reserves of crude oil and lease condensate in 2012.”
The EIA also notes that U.S. crude oil proved reserves climbed for the fourth consecutive year in 2012, a trend that Julius Walker, a global energy markets strategist at UBS Securities, says will endure:
“As our ability to get oil out of the ground improves and as prices stay high, more and more oil becomes available and moves into the category of proved reserves. It’s just another manifestation of what the shale-oil revolution means. I expect this trend to continue.”
As these reports show, two things are clear: shale resources are here to stay, and the United States’ energy abundance has far-reaching benefits. As such, the importance of U.S. policymakers recognizing shale as vital to economic, national and global stability cannot be understated.