For years, American energy companies and political officials hung on every word uttered by their OPEC counterparts. This year, OPEC member states are the ones running scared:
In Vienna, Ryan Lance, chief executive of ConocoPhillips, the third-largest US oil group by production, set out a vision of a global shale oil revolution to chill Opec members’ blood. The US was enjoying its first meaningful growth in oil production for 20 years, he said, and Conoco expected US shale liquids production to grow 150 per cent by 2020.“Thanks to both shale and the Canadian oil sands, North America could become self-sufficient in oil … by 2025, and even a net exporter,” he said.
Oil consuming states have frequently sounded the death knell for OPEC—and have always been wrong. The cartel wields enormous influence; if it weren’t for Saudi Arabia, Kuwait and the UAE raising output in response to the sanctions against Iran, oil prices would have shot through the roof. Over the next few years, OPEC’s grip on oil markets is unlikely to change much, yet the growth of oil and gas production in North and South America is changing the global energy scene and upsetting the established order.
Privately . . . Opec member states are worried. Paul Stevens, senior research fellow at Chatham House, said expectations had always been that the rise in oil demand over the next 15-20 years would be met by Opec. But shale oil was changing the equation.“With the technology moving beyond the US, you could foresee a situation where the increase in supply might not be coming from Opec,” he said. “That is bound to concern them.”
New technology and processes like fracking and horizontal drilling have made reserves that analysts and geologists previously thought were unrecoverable newly available and profitable. And that’s cause for some excitement.Maybe all those people worrying about “peak oil” should have been thinking about “peak OPEC” instead.