US 'heading for energy independence'

7 November 2014

High levels of energy production and falling energy demand will help the USA achieve energy independence by 2025, according to analysis by Wood Mackenzie.

The outlook mirrors the prediction made by the International Energy Agency in 2012, when it noted how America's surge in natural gas and oil production from unconventional sources would have global implications.

"Over the last seven years, the US has added 3 million barrels per day of tight oil and 27.5 billion cubic feet per day of shale gas to the global energy mix, a spectacular 42 per cent increase in US oil and gas production," said James Brick, senior analyst with Wood Mackenzie's global trends service. In addition oil demand in the US is falling because of efficiency gains in the transport sector.

If the US achieved energy independence, it would be the first time since 1952 that the country exported more energy than it imported. However there are uncertainties facing the market that could delay the independence milestone or even enable it to achieve independence earlier than 2025.

According to Wood Mackenzie, the US vehicle fleet has the potential to improve efficiencies even faster than currently predicted, a factor that would help to reduce oil demand. The lifting of a crude oil export ban and greater production of tight oil would have a similar impact.

Factors that could delay energy independence include delays in developing critical export facilities, environmental regulations and energy policies that would encourage more gas to be used in the power sector.

"If local or national regulation that discourages fracking is passed, oil and gas production will be lower," says Brick. "Also, if US energy policy is enacted to reduce carbon dioxide emissions, it is likely gas used by the power sector will increase."

"Irrespective of the timing of independence, the US has started its transformation from energy consuming giant to prominent exporter," said Brick. "With this role shift comes obvious economic benefits but also shifting risks and new responsibilities."

Sian Crampsie



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