Shale oil production adds economic value, but critics say the costs to the environment are also large
A steeper-than-expected rise in US
shale oil reserves is about to change the global balance of power between new
and existing producers. Over the next five years, the US will account for a third of new oil
supplies, according to the
International Energy Agency (IEA). The US will change from the world's leading importer of oil to a net
exporter. Demand for oil from Middle-East oil producers is set to slow as a result.
"North America has set off a supply shock that is sending ripples throughout
the world," said IEA executive director Maria van der Hoeven.
The surge in US production will reshape the whole industry, according to the
IEA, which made the prediction in its closely-watched bi-annual report examining
trends in oil supply and demand over the next five years. The IEA said it expected the US to overtake Russia as the world's biggest gas
producer by 2015 and to become "all but self-sufficient" in its energy needs by
about 2035.
The rise in US production means the world's reliance on oil from traditional
oil producing countries in the Middle East, which make up Opec (the Organization
of the Petroleum Exporting Countries), will end soon, according to the
report. US production is set to grow by 3.9 million barrels of oil per day (bpd) from
2012 to 2018, accounting for some two-thirds of the predicted growth in
traditional non-Opec production, according to the IEA.
Meanwhile, global oil demand is set to increase by 8%
which would be met mainly by non-Opec supplies, the report said. The IEA still expects production capacity among traditional Opec suppliers in
the Middle East to continue to grow over the next five years, but at a slower
rate.
Opec capacity, which counts for 35% of today's global oil output, is expected
to rise by 1.75 million bpd to 36.75 million bpd in 2018, about 750,000 bpd less
than predicted in the IEA's 2012 forecast.
The IEA cites the "growing insecurity in North and Sub-Saharan Africa" in the
wake of the Arab Spring uprisings as a key reason for the slowdown. "The regional fallout from the 'Arab Spring' is taking a toll on investment
and capacity growth," the IEA said.
The sharp rise in US oil production is largely thanks to shale oil, a product
many have hailed as the saviour of the US energy market. Fracking, the process of blasting water at high pressure into shale rock to
release oil (or gas) held within it, has become widespread in the US.
But critics of shale oil point to environmental concerns such as high water
use and possible water contamination, the release of methane and, to a lesser
extent, earth tremors caused by drilling. The process has been banned in France, while the UK recently lifted a
moratorium on drilling for shale gas. Okay United States...what about those environmental concerns? Don't let your lust for cheap oil overcome your concern for saving our planet once more.
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