"The regional fallout from the 'Arab Spring' is taking a toll on investment and capacity growth.”" IEA
5/14/13, "US shale oil supply shock rocks global power balance," BBC
"A steeper than expected
rise in US shale oil reserves is about to change the global balance of
power between new and existing producers. Over the next five years, the US will account for a third of new oil supplies, according to The International Energy Agency (IEA).
The US will change from the world's leading importer of oil to a net exporter. Demand for oil from Middle-East oil producers is set to slow as a result.
"North America has set off a supply shock that is sending ripples throughout the world," said IEA executive director Maria van der Hoeven.
The surge in US production will reshape the whole industry, according to the IEA, which made the prediction in its closely-watched bi-annual report examining trends in oil supply and demand over the next five years.
The IEA said it expects the US to overtake Russia as the world's biggest gas producer by 2015 and to become "all but self-sufficient" in its energy needs by about 2035.
The rise in US production means the world's reliance on oil from traditional oil producing countries in the Middle East, which make up Opec (the Organization of the Petroleum Exporting Countries), would end soon, according to the report.
US production is set to grow by 3.9m barrels of oil per day from 2012 to 2018, accounting for some two thirds of the predicted growth in traditional non-Opec production, according to the IEA.
Meanwhile, global oil demand is set to increase 8% and this would be met mainly by non-Opec supplies, the report said
OPEC capacity, which counts for 35% of today's global oil output, is expected to gain 1.75m barrels of oil per day to 36.75m barrels of oil per day in 2018, about 750,000 barrels per day less than predicted in the IEA's 2012 forecast.
The IEA cites the "growing insecurity in North and Sub-Saharan Africa" in the wake of the Arab Spring uprisings as a key reason for the slowdown.
"The regional fallout from the 'Arab Spring' is taking a toll on investment and capacity growth," the IEA said.
The sharp rise in US oil production is largely thanks to shale oil, a product many have hailed as the saviour of the US energy market.
Fracking, the process of blasting water at high pressure into shale rock to release oil (or gas) held within it, has become widespread in the US.
But critics of shale oil point to environmental concerns such as high water use and possible water contamination, the release of methane and, to a lesser extent, earth tremors caused by drilling.
The process has been banned in France, while the UK recently lifted a moratorium on drilling for shale gas."
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6/15/12, "Report: Don't worry much about quakes and 'fracking',"AP, Seth Borenstein
"National Research Council experts weigh in."...
"National Research Council experts weigh in."...
"The controversial practice of hydraulic fracturing to extract natural gas does not pose a high risk for triggering earthquakes large enough to feel...a major government science report concludes.
Even those man-made tremors large enough to be an issue are very rare, says a special report by the National Research Council. In more than 90 years of monitoring, human activity has been shown to trigger only 154 quakes, most of them moderate or small, and only 60 of them in the United States. That's compared to a global average of about 14,450 earthquakes of magnitude 4.0 or greater every year, said the report, released Friday."...
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This is the article linked to by BBC:
5/14/13, "Supply shock from North American oil rippling through global markets," IEA
"The supply shock created by a surge in
North American oil production will be as transformative to the market
over the next five years as was the rise of Chinese demand over the last
15, the International Energy Agency (IEA) said in its annual Medium-Term Oil Market Report (MTOMR)
released today. The shift will not only cause oil companies to overhaul
their global investment strategies, but also reshape the way oil is
transported, stored and refined.
According to the MTOMR, the
effects of continued growth in North American supply – led by US light,
tight oil (LTO) and Canadian oil sands – will cascade through the global
oil market. Although shale oil development outside North America may
not be a large-scale reality during the report’s five-year timeframe,
the technologies responsible for the boom will increase production from
mature, conventional fields – causing companies to reconsider
investments in higher-risk areas.
In virtually every other aspect of the
market, developing economies are in the driver’s seat. This quarter, for
the first time, non-OECD economies will overtake OECD nations in oil
demand. At the same time, massive refinery capacity increases in
non-OECD economies are accelerating a broad restructuring of the global
refining industry and oil trading patterns. European refiners will see
no let-up from the squeeze caused by increasing US product exports and
the new Asian and Middle Eastern refining titans.
“North America has set off a supply shock that is sending ripples throughout the world,” said IEA Executive Director Maria van der Hoeven, who launched the report at the Platts Crude Oil Summit
in London. “The good news is that this is helping to ease a market that
was relatively tight for several years. The technology that unlocked
the bonanza in places like North Dakota can and will be applied
elsewhere, potentially leading to a broad reassessment of reserves. But
as companies rethink their strategies, and as emerging economies become
the leading players in the refining and demand sectors, not everyone
will be a winner.”
While geopolitical risks abound, market
fundamentals suggest a more comfortable global oil supply/demand balance
over the next five years. The MTOMR forecasts North American
supply to grow by 3.9 million barrels per day (mb/d) from 2012 to 2018,
or nearly two-thirds of total forecast non-OPEC supply growth of 6 mb/d.
World liquid production capacity is expected to grow by 8.4 mb/d –
significantly faster than demand – which is projected to expand by
6.9 mb/d. Global refining capacity will post even steeper growth,
surging by 9.5 mb/d, led by China and the Middle East.
The growth in North American oil production presents opportunities and challenges, notes the MTOMR.
With large-scale North American crude imports tapering off and with
excess US refining output looking for markets, the domino effects from
this new supply will continue. Having helped offset record supply
disruptions in 2012, North American supply is expected to continue to
compensate for declines and delays elsewhere, but only if necessary
infrastructure is put in place. Failing that, bottlenecks could pressure
prices lower and slow development.
While OPEC oil will remain a key part of
the oil mix, OPEC production capacity growth will be adversely affected
by growing insecurity in North and Sub-Saharan Africa. OPEC capacity is
expected to gain 1.75 mb/d to 36.75 mb/d, about 750 kb/d less than
forecast in the 2012 MTOMR. Iraq, Saudi Arabia and the UAE will
lead the growth, but OPEC’s lower-than-expected aggregate additions to
global capacity will boost the relative share of North America.
Rising non-OECD participation in the oil
market will be associated with continued growth in commercial and
strategic storage capacity, along with strategically located storage
hubs to support long-haul crude and product trade. African economies
will play a larger role in the global market than previously expected.
Although data leave room for improvement, there is strong evidence that
African oil demand has been routinely underestimated, and may grow by a
further 1 mb/d over the next five years.
Finally, steep growth in non-OECD
refining capacity will accelerate the transformation of the global
product supply chain, exerting downward pressure on refining margins and
utilisation rates and leaving OECD refineries at risk of closure,
notably in Europe. Product supply chains will continue to lengthen as
new merchant refining centres extend their reach, resulting in higher
disruption risks and potentially more volatile markets in
product-importing economies." via BBC
.
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