A recent Wood Mackenzie report is setting a date for American energy independence. Thanks to trends of high production and stabling demand, 2025 is expected to be the first year since 1952 that the U.S. will export more energy products than it imports. Rigzone.com reports:
A country can achieve energy independence through two channels,” said James Brick, senior analyst with Wood Mackenzie, in an Oct. 23 press release regarding Wood Mackenzie’s integrated outlook by its Global Trends Service. “It can either produce more or consume less, and the United States is doing both.”
As mentioned, the evolving change is partially driven by higher output. Researchers from Wood Mackenzie found that over the past seven years, the country has added three million barrels per day of tight oil and 27.5 billion cubic feet per day of shale gas to the global energy market. This is a staggering 42 percent increase in production.
In the same time period, domestic demand for oil and gas is decreasing. One major factor for this is new efficiency gains in power generation. In addition, harnessing natural gas and other alternative fuels for transportation are also driving down demand for oil.
But just because the Holy Grail is within reach does not mean it is inevitable. Researchers who drafted the recent Wood Mackenzie report acknowledge that policy must play its part. The report states that if the crude export ban is lifted then it is likely that energy independence will be attained before 2025.
The move would increase the price realised by domestic upstream producers as they would be able to access higher priced international markets. Receiving an additional US$5 per barrel could result in a production increase of 350-400,000 barrels per day.
The transport sector of the U.S. also carries a responsibility. The researchers predict that the country’s vehicle fleet will become 40 percent more efficient by 2030. Any further improvement would reduce US oil demand and consequently net oil imports.
Some of the biggest risk to American energy independence according to Wood Mackenzie include delays in developing critical export facilities, environmental regulations which limit upstream investment and energy policies that would encourage more gas to be used in the power sector. You can read more about the new report’s findings from Wood Mackenzie here.