U.S. Is Overtaking Russia as Largest Oil-and-Gas Producer

Photo: AFP

The Wall Street Journal              
Russel GOLD  and Daniel GILBERT 

The U.S. is overtaking Russia as the world's largest producer of oil and natural gas, a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations.

U.S. energy output has been surging in recent years, a comeback fueled by shale-rock formations of oil and natural gas that was unimaginable a decade ago. A Wall Street Journal analysis of global data shows that the U.S. is on track to pass Russia as the world's largest producer of oil and gas combined this year—if it hasn't already.

The U.S. ascendance comes as Russia has struggled to maintain its energy output and has yet to embrace technologies such as hydraulic fracturing that have boosted American reserves.

"This is a remarkable turn of events," said Adam Sieminski, head of the U.S. Energy Information Administration. "This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn't in a million years have dreamed about."

A lost decade for European natural gas?

IEA

Once-certain growth in demand withered away, but there are reasons to expect a resurgence

Like an athlete striving to re-attain past glories, European gas companies, along with their suppliers, look at domestic consumption and wonder, “When will it return to the record level of 2010?”

European OECD member countries consumed 567 billion cubic metres (bcm) that year, an 8% gain that more than wiped out the 6% drop in 2009 caused by the economic crisis.

But, as the IEA warned in the Medium-Term Oil and Gas Market Report 2011, that dramatic increase was an illusion, with half of the gain driven by a particularly cold winter. The milder 2011, along with anaemic economic growth and higher gas prices, indeed saw a 8% decline in demand. Neither the economic nor the pricing environment improved in 2012, and demand is estimated to have declined by 2%, getting close to the 500 bcm mark. Seasonally-adjusted gas consumption has actually lost ten years of gains, and a few countries, such as the United Kingdom, are back to levels unseen since 1995.

Only five years ago, most scenarios assumed that European gas demand would be well above 600 bcm in 2015 and around 700 bcm by 2030, driven by the power sector. Gas-fired plants were to benefit from their lower CO2 emissions compared with coal and their complementarity with renewables. Only scenarios featuring a strong increase of nuclear, renewable energy or both, plus drastic improvements in energy efficiency, were expected to dampen or reverse this growth track, and even then only in the long term (post-2020).

America: The Next Energy Superpower?

Anthony FENSOM*     THE DIPLOMAT

This year, the U.S. will likely surpass Russia and Saudi Arabia as the largest liquids fuel producer in the world.  

From previously challenging the “tyranny of oil,” newly inaugurated U.S. President Barack Obama enters his second term in office as leader of a potential oil and gas superpower.

According to BP’s Energy Outlook 2030, unconventional sources will make the United States virtually energy self-sufficient by 2030, largely thanks to the shale gas revolution.

“The U.S. will likely surpass Russia and Saudi Arabia in 2013 as the largest  liquids producer in the world (crude and biofuels) due to tight oil and biofuels growth…. Russia will likely pass Saudi Arabia for the second slot in 2013 and hold that until 2023. Saudi Arabia regains the top oil producer slot by 2027,” the London-based oil and gas giant said.

The U.S. Energy Information Administration (EIA) has forecast that the nation could become a net exporter of liquefied natural gas (LNG) as early as 2016, and a net exporter of total natural gas (including via pipelines) by 2020.

For the Asia-Pacific region, potential U.S. gas exports could undercut higher priced gas from Australia and elsewhere, resulting in lower fuel bills for major importers such as Japan and South Korea.

However, fast-growing China and India are expected to become even more reliant on imports to satisfy domestic demand, BP said in its report.

IEA May Tap Oil Stockpiles

Nour Malas The       Wall Street Journal

RIYADH, Saudi Arabia—The International Energy Agency, or IEA, will this week discuss at a governing board meeting whether to tap strategic stockpiles of crude oil against a backdrop of continued political turmoil across the Middle East, the agency's head said Tuesday.

The IEA's members are so far undecided on whether and when they will need to tap emergency stocks in light of potential production outages in Libya, said Nobuo Tanaka in an interview.

On Tuesday Libya shut all of its ports, including those used to export oil, as tensions in the country continue. Libya's estimated 44.3 billion barrels of oil reserves are the largest in Africa. Two major European oil companies, Eni SpA of Italy and Repsol YPF of Spain, said they were temporarily suspending operations in Libya.