Key Developments that Shape the World of Oil and Gas

The recent rise of oil production in the United States, referred to by some as the “shale boom,” has caused a significant change in the global discussion about energy. The United States is poised to become a much larger presence in global oil, thanks to higher levels of production from new drilling techniques that allow companies to tap into reserves of tight oil in formations of rocks. This rise in production has caused some to call for a lifting of the ban in place on exporting crude oil in the United States. To understand whether or not the lifting of this ban is a good idea, it is important to consider the current situation as well as the most common beliefs about the forecast for the future of oil production and reserves.

The U.S. Shale Boom

The shale boom is the name for a trend in the U.S. energy industry that has allowed oil companies to unlock more oil than ever before from rock formations, particularly shale. Some of the areas where production has risen tremendously include the Eagle Ford formation in south Texas and the Marcellus formation in western Pennsylvania, West Virginia, and parts of upstate New York.

Statistics from the Energy Information Association show that production in several key oil fields of the United States has tripled in growth between 2008 and 2014, from around 4 million barrels of oil per day to roughly 12 million. In May 2014, the EIA released a report indicating that U.S. crude oil production had reached an average of 8.3 million barrels per day, the highest monthly level in 26 years.

This tremendous growth in American oil has lead to a new dynamic in the global oil market. In the summer of 2014, the United States overtook Saudi Arabia and Russia to become the world’s largest producer of oil. This means that the U.S. is less dependent on foreign oil imports, since the wide-reaching ban on crude oil exports in the U.S. means that a huge majority of that oil stays at home.

Why the U.S. Bans Crude Oil Exports

Since the middle of the 1970s, the United States has banned almost all crude oil exports, to insulate the American economy from fluctuations by conserving as much of the country’s oil reserves as possible. This law and similar oil-conserving laws of the era grew out of fear from the 1973 oil embargo by OPEC against the United States, which resulted in a gas shortage that saw gas prices rise exponentially and dealt a significant blow to the American economy. Today, certain areas of California and Cook Inlet in Alaska are among the few places where gas can still be exported out of the country from.

Decades later, however, many believe that these bans are outdated and need to be revised based on current U.S. oil production levels and economic conditions, as well as future projections for energy production in the U.S. Opponents, however, are concerned that these forecasts may be misleading and are worried about the impact of increasing oil production.

Two Views on the Forecast for U.S. Oil Production and Reserves

Those that are in support of lifting the ban on crude oil exports generally feel that this would be an economically-sound decision, in part because of several reports showing that levels of oil reserves are higher than previously believed. In its annual study on world energy, BP put the United States’ oil reserves at 44.2 billion barrels, a 26% increase from its previous estimate. In 2012, the U.S. EIA similarly raised its projection of U.S. crude oil reserves by 15% to 33 billion barrels.

The combination of increased oil reserves, rapidly-rising oil production rates, and more efficient use of gas and oil leads some to believe that the U.S. will have enough oil to fulfill domestic energy requirements sooner rather than later. A report from BP in January projected that the U.S. will achieve energy independence by 2035. Proponents of lifting the ban on crude exports believe that allowing oil companies to export a portion of this surplus of American oil will help contribute to positive growth and sustained levels of oil production in the future.

On the other side of the debate, there are those who believe that the ban should stay in place for a few reasons. Some, like U.S. Senator Robert Menendez, believe that lifting the ban on exporting crude oil is simply an attempt by energy companies to grab more profits and will hurt America’s economic recovery by raising gas prices for businesses and consumers. Others are worried about the accuracy of oil estimates from the EIA and energy companies like BP.

In October, geoscientist J. David Hughes and the Post Carbon Institute published a report that conducted a comprehensive analysis of the 12 major shale formations that currently account for more than four-fifths of tight oil production in the United States. Hughes’ study paints a much different picture of the future of energy: it projects that oil production from most of the major U.S. formations will peak in the next decade, and by 2040 production levels will be far below the EIA’s predictions.

After reviewing the data, one thing is clear: production of oil in the United States is on the rise. The country’s future direction depends on exactly how sharp that rise is. While the precise numbers may still be unknown, it is safe to say that the amount of oil reserves available in the U.S. and the ability of energy companies to extract this oil will have a major impact on the American economy and foreign policy in the coming years.

UK Shale Gas – Impending Boom or Arrested Development?

Much has been said in the United Kingdom about the potential for shale gas to transform the UK energy market as it has in the United States, where wholesale gas prices are a third of those paid by British consumers. The British Geological Survey estimates that the UK’s main shale formation, the Bowland Shale (Figure 1), has some 1,300 Tcf of gas in place. With annual gas consumption in the UK at around 3 Tcf, this alone could amount to decades of supply even at very conservative estimates of economically recoverable reserves. There are, however, significant obstacles to U.S.-style growth in the UK shale gas industry.
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Shale Gas Market is Expected to Reach $104.1 Billion, Globally, by 2020

Shale Gas Market is Expected to Reach $104.1 Billion, Globally, by 2020 – Allied Market Research

Cathy Viber
Email: Cathy Viber
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Portland, Oregon – (September 16, 2014) According to a new market research report by Allied Market Research titled, “Global Shale Gas Market (Technology, Application and Geography) – Industry Analysis, Trends, Share, Opportunities and Forecast, 2013 – 2020” the global shale gas market is forecast to reach $104.1 billion by 2020, registering a CAGR of 9.3% during the forecast period (2014 – 2020). The corresponding volume consumption will reach 19,619.4 bcf in the same year. The advent of hydraulic fracturing and horizontal drilling techniques has nearly doubled the efficiency of shale gas retrieval from plays, revolutionizing the shale gas market. China is a major Asian country to propel the demand aided by insatiable energy needs and increasing dependence on natural gas.
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Stepping Up to the Challenge: How Local Communities in the Utica Shale Play are Taking Advantage of the Boom

By now, all of us have heard about the far-reaching effect that shale fracking has had on our national energy policy. What is less clear is its impact on the many rural communities around the country that overlie the oil and gas-rich shale. Many of these areas have seen the shale boom as a sort of saving grace: one that promises good jobs and prosperity in regions where high poverty and unemployment have lingered for generations. Conversely, many shale communities are discovering that the shale boom is not without its challenges.
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