Oslo, Norway- Unconventional energy sources
will lead a dramatic turnaround in the projected energy
trade balance of the United States and Canada, and could
create significant changes in the global energy market, a
Duke University energy economist told the Autumn Conference
sponsored by Statoil.
Richard Newell, director of the university's Energy
Initiative and the Gendell Associate Professor of Energy
and Environmental Economics at the Nicholas School of the
Environment, was one of four featured speakers at the
annual conference scheduled for Nov. 19 in Oslo.
Key in this projection is the rise of North American oil
and gas production from unconventional sources, such as
shale gas, tight oil, Canadian oil sands and biofuels.
"If the word 'revolution' implies tumult,
turning things upside down, and not having clarity about
where things will end up, it describes the current
situation with North American unconventionals pretty
well," Newell said. "How the future unfolds will
depend not only on how technology and markets evolve, it
will also depend on how well energy companies perform in
developing these resources in an environmentally and
socially responsible way."
In his prepared remarks, Newell noted the findings of the
International Energy Agencyâs 2012 World Energy Outlook,
released Nov. 12, which anticipates the emergence of North
America as a net oil exporter and the United States as a
net exporter of natural gas over the next generation.
The U.S. Energy Information Administration (which Newell
headed from August 2009 to June 2011) corroborates this
forecast. The agency predicts U.S. and Canadian imports of
oil and other liquid fuels will drop from about 8 million
barrels per day in 2010 to about 1 million barrels per day
by 2035, assuming vehicle fuel economy standards also
continue to improve.
Although conventional liquids production is expected to
decline over this period, it is more than offset by a
substantial increase in the production of tight oil, oil
sands, natural gas liquids and biofuels. "But there is
significant uncertainty given how recent these developments
are," Newell added, "and actual future production
could be lower or higher than this depending on the
ultimate resource size, well productivity, and other
Although this shrinking import gap likely means that
suppliers such as Saudi Arabia, Venezuela, Russia and
Nigeria will send less oil to the United States, demand is
expected to rise elsewhere in the world, providing an
alternative export destination for the oil that the U.S.
will no longer need. Global energy relationships and
markets will likely change and evolve as a result.
For natural gas, the situation will be similar, Newell
said. Instead of importing increasing quantities of natural
gas as forecast several years ago, U.S. production will
likely exceed demand and the United States could become a
supplier of natural gas to the world.
"Back in 2005 experts in both government and industry
thought the United States was on a path to importing an
increasing share of its natural gas, with much of those
imports coming in the form of liquefied natural gas,"
or LNG, Newell said. Policymakers were concerned the United
States would be unable to build LNG terminals fast enough
to bring in the needed supplies.
"Over the last few years there has been a dramatic
turnaround and now the United States is headed toward
becoming a net natural gas exporter by the next
decade," he said. "Whereas companies had been
investing in multibillion-dollar LNG terminals to import
critically needed supplies of gas, they are now investing
in multibillion-dollar LNG export facilities." One of
these facilities (Cheniere Energy's facility in Sabine
Pass, La.) has already been permitted and could be
exporting LNG within the next few years.
Ample supplies and low U.S. prices present an opportunity
for North American gas producers and LNG project developers
to increase exports to both Asia and Europe, where prices
are significantly higher, or to the Caribbean where islands
still rely heavily on oil for power, or to South American
countries such as Chile, which rely heavily on LNG, Newell
But the idea of LNG exports from the United States is also
politically controversial, with opponents arguing that they
could drive up domestic natural gas prices. "Such
price increases could detrimentally affect households that
consume natural gas, power producers that generate
electricity from natural gas, or industries that rely on
natural gas as a major input, such as chemicals
producers," Newell said. "An opposing viewpoint
argues that there are economic benefits of gas exportation,
including the potential for job creation, improved trade
balances, and more stable supply conditions for shale gas
The Autumn Conference is sponsored by Statoil, Norway's
state-owned oil company, and held in cooperation with the
Norwegian Ministry of Petroleum and Energy and the
International Energy Agency. Additional featured speakers
include Ola Borten Moe, Norway's minister of petroleum
and energy; Fatih Birol, chief economist, International
Energy Agency; and Helge Lund, president and CEO of Statoil