North America is set to become a “titan of unprecedented proportions” in the refined fuels market by the end of the decade, according to a new report by the International Energy Agency (IEA). Scarcely a decade ago the U.S. was the world’s biggest importer of refined petroleum products, but the shale boom has turned America into the world’s largest exporter of oil products. Bloomberg reports the good news:
The shale supply surge means that U.S. oil refineries benefit from cheaper crude than their counterparts elsewhere in the world. West Texas Intermediate, the U.S. grade, has been cheaper than the global benchmark Brent for almost all of the past four years. The output expansion contrasts with the Organization of Petroleum Exporting Countries, whose producers may struggle to raise production amid political turmoil, security concerns and aging fields, the IEA said.
Fracking has unlocked oil and gas reserves trapped in shale rock formations, and in so doing has reshaped the U.S. energy landscape. But to this point, the shale boom has remained an American phenomenon, due to a unique list of advantages: favorable geology, an already mature oil and gas industry, plenty of players willing to invest in risky new plays, and the technical know-how to deploy the dual technologies of hydraulic fracturing and horizontal well-drilling. But the IEA now predicts that shale will be going global sooner, rather than later, as the WSJ reports:
[P]olicy developments in Russia and Latin America [are] set to encourage the application of unconventional extraction technologies on a larger scale than ever before.In its most recent analysis, which takes a five-year view of the oil market, the IEA predicted that tight oil production from outside the U.S. could account for 650,000 barrels a day of global oil supply by 2019.
The U.S. is still expected to produce the lion’s share of oil and gas trapped in shale for the foreseeable future; while 650,000 barrels is no pittance, the IEA projects the U.S. will produce nearly 90 percent of the world’s tight oil in 2019. Longer term, the benefits of tapping shale reserves are just too great for countries like China and Russia to forego, and they’ll work to adapt and catch up. In the meantime, America gets to enjoy the fruits of its massive head start.