Mar 22 2012 |
more articles from
|
ENERGY 2020 :North America, the New Middle East?
For the first time since 1949, the US has become a net petroleum product exportingcountry and has edged out Russia as the world's largest refined petroleum exporter.A simple explanation would point to lower demand and a struggling economy whichrequires less imported energy. But, that would only get you half the answer. USdemand has fallen by some 2-m b/d since its peak in 2005 in part due to therecession but also due to a structural change due to demographic changes, policieson fuel efficiencies and the mass-commercialization of technologies. The moreexciting part of the answer is on the supply side as the US has become the fastestgrowing oil and natural gas producing area of the world and is now the mostimportant marginal source for oil and gas globally. Add to this steadily growingCanadian production and a comeback in Mexican production and you get to ahigher growth rate than all of OPEC can sustain.Five incremental sources of liquids growth could make North America the largestsource of new supply in the next decade: oil sands production in Canada,deepwater in the US and Mexico, oil from shale and tight sands, natural gas liquids(NGLs) associated with the production of natural gas, and biofuels. Putting thesetogether, North America as a whole could add over 11-m b/d of liquids from over 15-m b/d in 2010 to almost 27-m b/d by 2020-22.
The shale gas production boom that propelled the fundamental change in thenatural gas markets in the US could begin to transform other sectors includingpower generation and transportation. Other incremental gains could come fromLNG exports with North America acting as the swing supplier for the world. But themost momentous change looks likely to be in the re-industrialization of Americabased on dramatically lower cost feedstock than is available anywhere in the world,with the possible exception of Qatar.
The economic consequences from this supply and demand revolution arepotentially extraordinary. We estimate that the cumulative impact of new production,reduced consumption and associated activity may increase real GDP by 2.0 to3.3%, or $370-$624 billion (in 2005 $) respectively. $274 billion of this comesdirectly from the output of new hydrocarbon production alone, while the rest isgenerated by multiplier effects as the surge in economic activity drives higherwealth, spending, consumption and investment effects that ripple through theeconomy. This potential re-industrialization of the US economy is both profound andtimely, occurring as the US struggles to shake off the lingering effects of the 2008financial crisis.
The reduced vulnerability of North America -- and the world market -- to oil pricespikes also has deep consequences geopolitically, including the reduced strategicimportance to the US of changes in oil- and natural gas-producing countriesworldwide. Pressures towards isolationism in the US will likely grow, withconsequences for global stability that can only just begin to become understood.
Whether the increase in production results in the US reducing its imports or whethernet exports grow doesn't matter much to world balances. Either way, North Americais becoming the new Middle East. The only thing that can stop this is politics --environmentalists getting the upper hand over supply in the U.S., for instance; orFirst Nations impeding pipeline expansion in Canada; or Mexican productioncontinuing to trip over the Mexican Constitution, impeding foreign investment ortechnology transfers -- in North America itself.
© Copyright Zawya. All Rights Reserved.
Post Your Comment