Implications fuel Canada’s quest for new oil customers
US energy self-sufficiency will impact Canada’s oil sands.
WASHINGTON — The International Energy Agency predicts the US will be capable of meeting its own energy needs by 2035, and that it will become the world’s largest oil producer by the end of this decade — eclipsing Saudi Arabia for a time.
The US march toward energy self-sufficiency will have implications for Canada, which has been sending some 2.45 million barrels of crude a day south of the border so far this year and is the country’s top oil supplier.
“The United States, which currently imports around 20% of its total energy needs, becomes all but self-sufficient in net terms — a dramatic reversal of the trend seen in most other energy-importing countries,” the agency said in its World Energy Outlook.
The IEA said the surge in US 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.
The increased output, along with stepped up fuel efficiency measures in the transportation sector, mean U.S. oil imports will wane so much that North America will become a net exporter around 2030.
The US is expected to overtake Saudi Arabia as the globe’s top oil producer before 2020 until about the middle of the next decade when the Saudis take back their top spot.
In the next few years, supplies will increasingly come from countries that don’t belong to the Organization of Petroleum Exporting Countries, including Canada.
Non-OPEC production is expected to plateau at 53 million barrels a day after 2015, up from nearly 49 million in 2011.
OPEC’s share of global production is expected to rise after 2020, from its current 42% to 50% by 2035.
Within Canada, there has been a push to look beyond the US as an export customer to energy-hungry markets elsewhere in the world, particularly in Asia.
There are currently two pipeline proposals in the works — Enbridge Inc.’s (TSX:ENB) Northern Gateway and Kinder Morgan’s Trans Mountain expansion — to connect growing Canadian supplies to Asia via West Coast export terminals.
Supporters of West Coast oil pipelines call those projects nation-building undertakings of the same magnitude as the national railway that would bring substantial economic benefits to Canada.
But the idea of shipping crude by pipeline through BC’s mountainous terrain and then by super tanker through coastal waters has not been sitting well with many, particularly in the province.
There are fears a spill could cause dire environmental harm and dozens of B.C. First Nations groups have said there are no circumstances under which they would allow an oil pipeline to cross their land.
As an alternative to the controversial West Coast projects, Enbridge and fellow pipeline giant TransCanada Corp. are looking east. Both have plans in the works to send crude to Ontario and Quebec, with the possibility of eventually exporting crude through various points in the Atlantic basin.
In its report, the IEA made note of Asia’s rising significance.
For example, oil exports out of the Mideast will increasingly go to Asia as the U.S. becomes more self-sufficient. That will increase the global focus on the security of strategic routes that bring Middle East oil to Asian markets. Tensions between Iran and western powers have raised concerns that oil exports from the Persian Gulf could be blocked in a potential conflict over Tehran’s alleged plan to develop nuclear weapons.