The New York Times reports: The boom in oil from shale formations in recent years has generated a lot of discussion that the United States could eventually return to energy self-sufficiency, but according to a report released Tuesday by the International Energy Agency, production of such oil in the United States and worldwide will provide only a temporary respite from reliance on the Middle East.
The agency’s annual World Energy Outlook, released in London, said the world oil picture was being remade by oil from shale, known as light tight oil, along with new sources like Canadian oil sands, deepwater production off Brazil and the liquids that are produced with new supplies of natural gas.
“But, by the mid-2020s, non-OPEC production starts to fall back and countries from the Middle East provide most of the increase in global supply,” the report said. A high market price for oil will help stimulate drilling for light tight oil, the report said, but the resource is finite, and the low-cost suppliers are in the Middle East.
“There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,” said Maria van der Hoeven, executive director of the International Energy Agency. The agency was founded in response to the Arab oil embargo of 1973-74, by oil-importing nations.
The agency’s assessment of world supplies is consistent with an estimate by the United States Energy Department’s Energy Information Administration, which forecasts higher levels of American oil production from shale to continue until the late teens, and then slow rapidly.
“We expect the Middle East will come back and be a very important producer and exporter of oil, just because there are huge resources of low-cost light oil,” Ms. van der Hoeven said. “Light tight oil is not low-cost oil.” [Continue reading…]
Americans currently consume about 22 million barrels of oil daily, of which about two-thirds is imported. The Department of Energy’s Energy Information Administration (EIA) expects imports to reach 70% by 2025. This means we send billions of dollars abroad in payment for foreign oil. This makes little sense when, according to the U.S. Minerals Management Service (MMS), there are vast reserves of oil and gas beneath Federal lands and coastal waters. And it is likely that even these estimates are low. For instance, in 1987, MMS estimated that there were 9 billion barrels of oil in the Gulf of Mexico. By 2007, once drilling had begun in deeper waters, MMS had revised its estimate upward to 45 billion.