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Energy Abundance
Don’t Doubt the Strength of U.S. Shale

Most news about the state of American energy has been grim of late, and for good reason: the collapse in oil prices has pushed dozens of U.S. suppliers into bankruptcy as the fledgling shale industry—the driver behind this country’s remarkable energy renaissance over the past decade—has struggled to stay profitable when a barrel of oil is selling for less than half of what it was two years ago. On the natural gas side of things, a domestic glut has kept prices similarly depressed, and hopes that liquifying shale gas and shipping it abroad have been let down by an already well-supplied global LNG market and corresponding drops in prices.

But reports of America’s energy demise have been greatly exaggerated, because despite stiff competition elsewhere, there’s no denying that the United States is sitting on huge reserves of yet untapped tight oil and shale gas, and companies are hard at work innovating new ways to bring those hydrocarbons out of the ground, even at discount prices. In fact, the EIA expects the U.S. will soon become a net energy exporter. Rob Nikolewski reports for the San Diego Union-Tribune:

[The EIA anticipates] energy production [will outstrip] consumption between 2025 and 2030, making the United States a net energy exporter for the first time since the 1950s. “In the ’50s we were just importing a whole lot less,” said EIA spokesman Jonathan Cogan, “We didn’t need to import much petroleum, which is the biggest source of our imports in energy.” […]

The primary reason for the shift from net importer to net exporter “is we know how to produce natural gas in a very inexpensive way,” [said University of Houston energy economist Ed Hirs]. “And we’re going to be exporting the natural gas out of the U.S. and potentially, we’ll be exporting electricity.”

That’s not the only metric by which shale is impressing these days, either. Did you know that the United States is the biggest supplier of oil and gas in the world, producing a great deal more than either Russia or Saudi Arabia? As the EIA reports, it’s not even close:

U.S. petroleum and natural gas production first surpassed Russia in 2012, and the United States has been the world’s top producer of natural gas since 2011 and the world’s top producer of petroleum hydrocarbons since 2013…For the United States and Russia, total petroleum and natural gas hydrocarbon production, in energy content terms, is almost evenly split between petroleum and natural gas. Saudi Arabia’s production, on the other hand, heavily favors petroleum. […]

Increases in U.S. petroleum and natural gas production over the past several years are directly attributed to production from tight oil and shale gas formations. Several factors kept hydrocarbon production increases in Russia smaller than increases in the United States in 2015. Although Russian petroleum production continued to increase, natural gas production declined because of poor economic conditions and a mild winter, which resulted in lower domestic demand for natural gas. Russia’s total combined production of petroleum and natural gas increased by just 0.1 quadrillion Btu in 2015.

We are living in the midst of a veritable energy boom, and while it’s true that oil production has tapered over the past year in the face of bargain pricing, it’s not true in the slightest that this boom is going bust. There’s something special happening to North America’s energy prospects, and it’s starting here in the U.S.—thanks to shale.

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  • Frank Natoli

    The boom is thanks to shale but NOT the technology. It’s the fact that the shale oil is on private land, beyond the ability of the environmental maniacs controlling federal regulations, that the shale oil could be extracted. There is far more oil in ANWR, Pacific, Gulf and Atlantic coasts, conventionally extractible, that is still off limits because of policy, not because of technology.

  • Andrew Allison

    “Most news about the state of American energy has been grim of late . . .” Huh?

  • Jacksonian_Libertarian

    “thanks to shale”

    No, thanks to the “Feedback of Competition” that rules the private sector. The same thing could be happening in Healthcare, Utilities, Labor Gangs, and other monopolistic sectors of the economy.

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