It’s not quite Lexington and Concord, but America’s energy revolution is being heard 'round the world.
“We’re starting to see reverberations around the world of what’s happening in North America,” says Daniel Yergin, vice chairman of IHS and a Pulitzer Prize-winning author of, most recently, The Quest. “Everywhere in the world … there are big discussions of the impact of shale gas and tight oil in the U.S.”
In Europe, for example, there are concerns about the growth in shale gas giving America a “tremendous advantage” for manufacturing that could cause the EU to be less competitive. Russia and China are also paying very close attention, he says.
Not surprisingly, the biggest impact of America’s energy boom – North Dakota’s Bakken shale alone is expected to top 1 million barrels per day by year-end – is most acutely being felt by members of the Organization of Petroleum Exporting Countries, a.k.a. OPEC, says Yergin.
Total U.S. energy production has risen 56% since 2008 and the increase alone – never mind preexisting output -- is bigger than the entire output of 8 of OPEC’s 12 members, Yergin notes, suggesting America's boom is putting pressure on West African producers like Nigeria, which used to ship most of their crude to East Coast refineries. "They're being turned away now because of oil coming from North Dakota by rail and barge to places like Philadelphia,"he says. "Those producers are having to look to Asia."
Thus, the International Energy Agency’s annual World Energy Outlook last week is of acute interest to OPEC members. The IEA predicts America will surpass Saudi Arabia as the world’s largest oil producer by 2015, a development that generated major headlines here. Less discussed was the IEA’s accompanying forecast that American production will plateau by 2020 and decline soon thereafter, putting OPEC back in the pole position by 2030.
“The report was well received in the Middle East,” says Yergin, who was in the region when the IEA forecast was released. “People [in the Mid-East] were getting a little anxious about all this North American oil coming on the scene.”
The outstanding question then, is whether the IEA’s forecast will prove accurate.
“The IEA is offering a reasonable, prudent answer [but] I don’t think we know the answers,” Yergin says. “I think it’s still early days.”
Noting much of the U.S. increase to date has come from North Dakota and South Texas, the energy maven says the real question is “how rich” other regions of shale deposit will prove to be. “You don’t know until you drill.”
Watch the accompanying video to hear Yergin's take on the issue of fracking safety and check out his recent piece in Politico Magazine about the political implications of America's reach for energy independence.