The U.S. energy sector is experiencing a
renaissance"the shale gale"that few would have
predicted 10 years ago, Jeff Meyer, associate director of IHS
Cambridge Energy Research Associates Inc., said Sept. 9 in an
energy outlook at the Metals Service Center Institutes
The energy boom offers
many benefits, including cleaner energy options, a cheap and
plentiful feedstock for chemical and plastics manufacturing,
and an alternative fuel source for commercial vehicle fleets.
Its also fueling the development of an export market.
All of these
applications help to lower costs for refining and
manufacturing, making U.S. products more competitive globally.
Atop all that, the United States is reducing its reliance on
foreign sources of oil, Meyer said.
There will be waves of
demand growth to catch up to the abundant supply of shale, oil
sands oil and gas, he said. The power sector is consuming the
first wave of additional supply, while exports will spur a
second wave of demand.
By 2020, liquefied
natural gas (LNG) exports will be in full swing, Meyer
predicted. "There is a rush to export. Dozens of projects are
proposed for the United States and the west coast of Canada.
But only a fraction of the announced capacity increases will
become operational. The global LNG market couldnt absorb
it all (planned capacity)."
The U.S. oil patch
also has the advantage of private leases and pipeline
infrastructure. Privately funded development usually happens
more quickly than state-owned development. For oil alone, the
United States is the greatest source of new
productiongreater than Russia, Saudi Arabia and Iraq.
Meyer believes U.S. crude oil production will grow another 25
percent by the end of this decade. Thats not just from
oil sands and shale, but conventional drilling, too. Petroleum
companies are using completion technology that allows them to
get every last drop out of a well. Crude oil producers also
benefit by extracting "associated gas" from existing rigs.
Meyers view of
the landscape was sunny, but there are risks. The two greatest
are declines in oil and gas pricing, which curbs
producers appetite for expanded exploration and drilling,
and accidents that color consumers views about the safety
of energy extraction and transportation. That can lead to
policy decisions that negatively impact energy markets.