Shale Revolution Reverses Global Energy Flow

Posted by Michelle Howard
Wednesday, April 09, 2014
Source: US Energy Information Administration (EIA), JKEMP

The United States has replaced OPEC as the marginal petroleum supplier to the world thanks to the shale revolution and improvements in automotive fuel efficiency.

Net U.S. imports of crude and products have halved over the last five years, or by an amount equivalent to the entire daily crude exports of Saudi Arabia.

Net imports totalled 5.2 million barrels per day at the start of 2014, down from 11.2 million at the beginning of 2009, according to the U.S. Energy Information Administration (EIA).

Not one barrel of U.S. shale oil has been sent overseas (except small quantities to Canada) because of the long-standing ban on crude petroleum exports.

But increased U.S. production is still playing a role on global markets via a reduction in its crude imports and increased exports of refined products such as gasoline and especially diesel.

U.S. refiners and traders are successfully arbitraging around the ban by replacing imports of foreign crude with cheaper domestic oil and turning domestic crude that cannot be exported into refined products that can.

Total imports of crude and products shrank to an average of 9.8 million barrels per day in 2013 from a peak of 13.7 million in 2005.

Over the same period, product exports climbed to 3.6 million barrels per day from 1.1 million. Diesel exports doubled, while exports of gasoline, liquefied petroleum gas (LPG) and petroleum coke all recorded big increases.

Reversed Flows
The big three suppliers of crude to the United States - Canada, Mexico and Saudi Arabia - all maintained their sales volumes, according to a recent briefing paper published by the EIA ("U.S. crude oil imports fall but share of top three suppliers highest in four decades" Apr 4).

But imports from other countries in the Middle East, West Africa and Latin America have been squeezed hard, forcing them to turn to alternative markets in Asia.

And on the products side, the United States has sharply cut gasoline imports from Europe and emerged as a major diesel and LPG supplier to countries in Latin America and further afield.

The North American energy revolution and rapid industrialisation in Asia have effectively reversed the flow of energy round the globe. For most of the 20th century, the primary flow was from East to West. Now the main flow is from West to East.

Secure Supplies
The shale revolution has also shifted the marginal source of supply from the Middle East, Africa and Latin America, where investment and production are tightly controlled by governments, to Texas, Oklahoma, North Dakota and other states, where production is driven by the private sector.

Not since the mid-1980s, when new oil fields came onstream in the North Sea, Alaska and the Soviet Union, have world oil supplies been so diversified.

With diversification comes greater security. Global oil markets have weathered the loss of millions of barrels per day from Libya, Syria, South Sudan and Iran over the last three years with almost no impact on prices or the availability of crude.

New Era of Shale

Some analysts question whether the gains in U.S. shale output can be sustained or replicated in other countries, where the conditions both above and below ground are very different.

The hunt for shale opportunities in the rest of the world to match the quality of U.S. plays has so far proved disappointing, according to the head of exploration at Norway's Statoil .

But the shale revolution is just beginning. By coupling hydraulic fracturing and horizontal drilling with better use of seismic surveys, U.S. shale producers are cutting costs and focusing their drilling programmes more efficiently. Well productivity is still rising.

In the rest of the world, development continues to be hampered by lack of specialist crews and equipment, opposition from environmental campaigners, and the absence of the small entrepreneurial oil producers and private mineral rights that underpinned the North American shale boom.

Each of the barriers is in fact an opportunity to drive significant production if it can be overcome. The potential is enormous. Shale technology is becoming more mature. Skills are beginning to diffuse. And the financial incentive is strong.

Shale's transformative impact in the United States is already exerting a strong pull on policymakers and production companies elsewhere. New shale developments seem likely to emerge in China, Ukraine, South Africa, the United Kingdom, Argentina and other countries by the end of the decade, provided oil prices remain above $100 per barrel.

Advances in production technology are remaking the world petroleum market. If the four decades between the 1970s and the 2000s were the era of the Middle East and OPEC, the next two decades will be the era of North America and shale.

(By Reuters columnist John Kemp; The views expressed are his own. Editing by Jane Baird)

Maritime Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Offshore

Kvaerner in Statoil Unmanned Platform Project

Kvaerner say that Statoil has awarded it a concept study related to a standardised, unmanned dry tree wellhead platform for the Oseberg Future Development project.

Scotland Site for World's Biggest Tidal Array

The world’s biggest tidal array is to be built in North Scotland bringing jobs and energy security to the Pentland Firth region, informs a UK Government news release.

CBP Aircraft Locates Vessel in Distress

U.S. Customs and Border Protection Office of Air and Marine agents assigned to the North Dakota Air Branch have located four people on Red Lake after a call

Energy

Chilean Court Rejects Appeal Against Crow River Project

Chile's Supreme Court on Thursday rejected an application for an environmental organization against Crow River hydroelectric project, which plans to build in the

EMGS Reports 2Q and 1H 2014 Results

Electromagnetic Geoservices ASA's (EMGS) reported revenues of USD 42.5 million in the second quarter 2014, down from USD 61.3 million in the first quarter this year and from USD 44.

Banking on US Shale Gas Boom, Asia Petrochemical Firms Switch to LPG

Asia petrochemicals firms are building tanks and retooling plants to store and process liquefied petroleum gas imported from the United States, counting on a flood

Fuels & Lubes

LNG America Selects Topside Designer for LNG Bunker Barge

LNG America has selected Taylor-Wharton to commence the front-end engineering and design work for the cryogenic topside of the company’s 3,000 cubic meter Gemini

Lithuania Inks First Statoil LNG Deal

Lithuania seeks to cut dependence on Russia; Statoil to supply 0.54 bcm of gas per year. This will cover about 20 pct of Lithuania's demand. Lithuania signed

'Double Jeopardy – Trial by Media, Trial by Law' London Opening

BIMCO notes that the highly acclaimed "Double Jeopardy - trial by media, trial by law" first showcased at the BIMCO AGM in Dubai earlier this year is to be brought

LNG

Banking on US Shale Gas Boom, Asia Petrochemical Firms Switch to LPG

Asia petrochemicals firms are building tanks and retooling plants to store and process liquefied petroleum gas imported from the United States, counting on a flood

Mozambique: $30b Invested for 2018 LNG Export

More than $30 billion will be invested initially in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG),

LNG America Selects Topside Designer for LNG Bunker Barge

LNG America has selected Taylor-Wharton to commence the front-end engineering and design work for the cryogenic topside of the company’s 3,000 cubic meter Gemini

News

400 Migrants Rescued by USCG & RBDF

Coast Guard crews and Royal Bahamian Defence Force (RBDF) rescued more than 400 Haitians illegally migrating in three separate at sea interdictions in the span of 11 days.

Chilean Court Rejects Appeal Against Crow River Project

Chile's Supreme Court on Thursday rejected an application for an environmental organization against Crow River hydroelectric project, which plans to build in the

Navios Maritime Reports Better Revenues for 2Q & 1H, 2014

Navios Maritime Holdings Inc. a global, vertically integrated seaborne shipping and logistics company, today reported financial results for the second quarter and six months ended June 30, 2014.

Logistics

Ningpo Port Truckers Strike, Disrupt Freight

Thousands of truck drivers went on strike over salary and haulage rates in the eastern Chinese port of Ningbo this week, and a logistics firm said on Friday the

Container Manufacturer Reports Profit Plunge

World-leading container manufacturer and logistics services provider Singamas Container Holdings Limited (Singamas) has  announced its unaudited interim results for the six months ended 30 June 2014.

CACI Named MSC Logistics Prime Contractor

CACI International Inc says it has been selected as a prime contractor to provide logistics support to the U.S. Navy’s Military Sealift Command (MSC) on the Worldwide

 
 
Maritime Contracts Maritime Security Maritime Standards Naval Architecture Navigation Pod Propulsion Port Authority Ship Electronics Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2400 sec (4 req/sec)