For half a century, the global energy supply's center of gravity has been the Middle East. This fact has had self-evidently enormous implications for the world we live in -- and it's about to change.
By the 2020s, the capital of energy will likely have shifted back to the Western Hemisphere, where it was prior to the ascendancy of Middle Eastern megasuppliers such as Saudi Arabia and Kuwait in the 1960s. The reasons for this shift are partly technological and partly political. Geologists have long known that the Americas are home to plentiful hydrocarbons trapped in hard-to-reach offshore deposits, on-land shale rock, oil sands, and heavy oil formations. The U.S. endowment of unconventional oil is more than 2 trillion barrels, with another 2.4 trillion in Canada and 2 trillion-plus in South America -- compared with conventional Middle Eastern and North African oil resources of 1.2 trillion. The problem was always how to unlock them economically.
But since the early 2000s, the energy industry has largely solved that problem. With the help of horizontal drilling and other innovations, shale gas production in the United States has skyrocketed from virtually nothing to 15 to 20 percent of the U.S. natural gas supply in less than a decade. By 2040, it could account for more than half of it. This tremendous change in volume has turned the conversation in the U.S. natural gas industry on its head; where Americans once fretted about meeting the country's natural gas needs, they now worry about finding potential buyers for the country's surplus. COMMENTS (25) SHARE: Twitter Reddit Buzz More...
Meanwhile, onshore oil production in the United States, condemned to predictions of inexorable decline by analysts for two decades, is about to stage an unexpected comeback. Oil production from shale rock, a technically complex process of squeezing hydrocarbons from sedimentary deposits, is just beginning. But analysts are predicting production of as much as 1.5 million barrels a day in the next few years from resources beneath the Great Plains and Texas alone -- the equivalent of 8 percent of current U.S. oil consumption. The development raises the question of what else the U.S. energy industry might accomplish if prices remain high and technology continues to advance. Rising recovery rates from old wells, for example, could also stem previous declines. On top of all this, analysts expect an additional 1 to 2 million barrels a day from the Gulf of Mexico now that drilling is resuming. Peak oil? Not anytime soon.
The picture elsewhere in the Americas is similarly promising. Brazil is believed to have the capacity to pump 2 million barrels a day from "pre-salt" deepwater resources, deposits of crude found more than a mile below the surface of the Atlantic Ocean that until the last couple of years were technologically inaccessible. Similar gains are to be had in Canadian oil sands, where petroleum is extracted from tarry sediment in open pits. And production of perhaps 3 million to 7 million barrels a day more is possible if U.S. in situ heavy oil, or kerogen, can be produced commercially, a process that involves heating rock to allow the oil contained within it to be pumped out in a liquid form. There is no question that such developments face environmental hurdles. But industry is starting to see that it must find ways to get over them, investing in nontoxic drilling fluids, less-invasive hydraulic-fracturing techniques, and new water-recycling processes, among other technologies, in hopes of shrinking the environmental impact of drilling. And like the U.S. oil industry, oil-thirsty China has also recognized the energy potential of the Americas, investing billions in Canada, the United States, and Latin America.12NEXT Save big when you subscribe to FP.
Dieter Spannknebel/Getty Images
Amy Myers Jaffe is director of the Baker Institute Energy Forum at Rice University and co-author of Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold.
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THOMAS_PP
2:58 AM ET
August 15, 2011
I sure hope all that oil and
I sure hope all that oil and gas stays in the ground - otherwise climate change might get even worse than projected.
LORDMOCK
7:13 AM ET
August 15, 2011
Really?
Do you drive? Do you own a car? Do you use any kind of gas powered conveyance? Do you own a bicycle with tires and plastic parts? Do you have any plastic cups or plates in your cabinets? Are you right now using a keyboard with plastic keys? Are you using a touch screen with plastic components? Do you use any thing made of plastic? Do you use any electronics? Are you using electricity right now? Our modern society runs on oil and coal, we are nowhere near the level of advancement necessary for us to compete with the rest of the lesser advanced world with just us going green. If we fail and Europe fails than we loose the foundations of our modern world, it will not be pretty, it will not be some hippy love fest, it will be the beginning of a modern dark age and just like the first dark age human advancement will not only stall but go careening backwards. What happens when there is no gps, no functioning cell system, no power grid, what happens when we look at cell towers, and roads, and even skyscrapers in the same way medieval Europe looked at the Roman roads, aqueducts, and the coliseum?
AKATHIST
10:02 AM ET
August 15, 2011
Oh, good point, driving our
Oh, good point, driving our cars for the next 100 years is definitely worth the upcoming Holocene extinction event.
JAREDTROTTIER
10:05 AM ET
August 15, 2011
Really??
That is what is going to happen if we just continue to use non-renewable resources. The current governments and their policies are not striving hard enough for a better transition into a renewable energies. If we continue to use these depleting resources they will be gone in our lifetime creating not only a systematic shock to our current system, but also a shock to our environment. Scientist predict that with the rising temperatures that the environment that we are used to will change dramatically in the next 100 years.
The article assumes that the United States will become "the world capitol of energy" through further exploration of our on oil resources. What might better give us this title would be through investment and development in renewable resources. but considering the fact that the united states has a capitalist economic system, we will continue to exploit our natural resources, shore's and oceans, as well as the countless environments that have been protected from this sort of thing.
LORDMOCK
10:52 AM ET
August 15, 2011
Extinction event
because we all know that the gradual rise of temperatures over the course of decades is far worse than a sudden asteroid impact or mega volcano.
LORDMOCK
11:11 AM ET
August 15, 2011
Do it now or you'll die
Ok I agree that the very structure and nature of the fuels we use and the way we distribute and generate power has to change, but to act like it has to be done within the decade or were all doomed is unrealistic, it's basically like telling a 5 year old he has to grow up in one month or he'll die.
AKATHIST
11:12 AM ET
August 15, 2011
Wow... just wow...
So what if there is a megavolcano or an asteroid impact? If it hits, it hits. It's out of our control. But rising global temperatures are not.
LORDMOCK
11:56 AM ET
August 15, 2011
Control is an illusion
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