IEA: US To Be World’s Largest Oil Producer

The IEA has released it’s 2012 World Energy Outlook.  The big headline is that they’ve bought into the idea that the US energy future is too bright to stare hard at:

Energy developments in the United States are profound and their effect will be felt well beyond North America – and the energy sector. The recent rebound in US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity – with less expensive gas and electricity prices giving industry a competitive edge – and steadily changing the role of North America in global energy trade. By around 2020, the United States is projected to become the largest global oil producer (overtaking Saudi Arabia until the mid-2020s) and starts to see the impact of new fuel-efficiency measures in transport. The result is a continued fall in US oil imports, to the extent that North America becomes a net oil exporter around 2030.

I am less persuaded myself that using a thousand oil rigs to generate an extra one million barrels per day of oil is necessarily a sign of a large and long-term sustainable increase in US oil production (as opposed to, say, frenzied scraping of the bottom of the barrel).  But, still, I’m not certain beyond a reasonable doubt just how deep this particular barrel can be scraped.

At any rate, one thing that is interesting is that the chart above shows the US second peak just reaching 10mbd of oil, and yet the US will be the largest producer of oil.  Since the IEA says Saudi production is currently at 9.5mbd and Russia at 10.75mbd, the implication is that neither Russia or Saudi Arabian production will increase at all between now and 2020 when the US will surpass them.

Apparently, the strategy of massed hordes of drilling rigs fracking for shale oil can only be of benefit in the United States.

It used to be Saudi Arabia that was used to fill in the wedge between desired supply and expected demand in official energy projections.  Apparently the agencies have now accepted that Saudi Arabia cannot or will not increase production and the US is now being assigned the role of supplier of last resort for future energy projections.