Changing demand cycles and emerging new technologies are on track to throw the world's oil map out on its ear and make the United States the world's largest oil producer within the next decade, according to a report.
The International Energy Agency said in its annual World Energy Outlook on Monday that it expects the United States, which currently imports about 20 per cent of its energy needs, to become basically self-sufficient by around 2020 thanks to emerging shale oil technologies and renewable energy sources such as wind and solar.
'There is a pronounced shift '—IEA's energy report
The IEA is a Paris-based international agency that provides research on the energy industry in 28 developed Western economies.
The IEA said the surge in U.S. production is a result of technological advances that have helped unlock vast oil supplies from shale rock formations such as the Bakken, which stretches through parts of North Dakota, Montana and Saskatchewan.
In its report, the IEA says it expects global energy demand to grow by more than a third between now and 2035. But in Western democracies, demand is expected to remain fairly flat as efficiency gains mitigate the need to use significant amounts of new fossil fuels.
"There is a pronounced shift away from oil, coal [and, in some countries, nuclear] towards natural gas and renewables," the report said.
Most of the growth in demand comes from developing economies, predominantly in Asia.
"North America becomes a net oil exporter around 2030," the IEA said.
Having the world's largest economy essentially no longer have a need to import any energy is a significant development for the world's economy, to say nothing of global geopolitics, where American foreign policy has been influenced by its need for fossil fuels for decades.
The IEA's projections are based on a marked increase in the use hydraulic fracking, which may make them implausible, given opposition to the technology.
The U.S. currently produces about 6.3 million barrels of oil per day, a figure that the U.S. government projects to increase to 6.8 million next year. That's well off the 10 million barrels per day that the world's largest producer, Saudi Arabia, currently churns out.
But the fracking and offshore increase will turn that around within a decade, the IEA said.
"By around 2020, the United States is projected to become the largest global oil producer," the report reads.
Canadian exports projected higher
Even as the U.S. gets more energy independent, the IEA said, Canadian oil exports are projected to tick higher in the coming years.
Output from the oilsands is expected to grow rapidly, from 1.6 million barrels per day last year to 4.3 million barrels per day by 2035. When conventional oil is added in, Canada's expected oil output is forecast to grow rapidly. Canada produced about two million barrels of oil a day in 1990, but that figure jumped to 3.5 million barrels a day last year and is projected to increase to 6.3 million barrels a day by 2035.
With almost 180 billion barrels, Canada currently has the world's third largest supply of proven oil reserves, behind Saudi Arabia and Venezuela.
"Without new export capacity, western Canadian oil production would exceed regional consumption and current export capacity before 2016," the IEA said.
That's a reference to the delay in getting pipelines constructed to ship Canadian oil out to export markets. Most of the major pipelines proposed, such as the Keystone XL, are in a regulatory holding pattern at the moment.
There's a growing push to look beyond the U.S. as an export market, and news of Canada's largest trading partner becoming energy independent in the near future is sure to add some credence to that notion.
Enbridge Inc.'s Northern Gateway and Kinder Morgan's Trans Mountain expansion are aimed at connecting growing Canadian supplies to Asia via West Coast export terminals.
Other proposals are examining the possibility of shipping Alberta oil eastward to be refined and exported on the Atlantic coast.