SCHAUMBURG, Ill. 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 Economic Summit.
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.