The International Energy Agency caused a sensation last week when it released a report predicting that the United States would pass Russia in oil production by 2016, Saudi Arabia by 2020 and become essentially energy self-sufficient by 2030. Only weeks before Republican Presidential candidate Mitt Romney was being pilloried for suggesting that North America – meaning the US, Mexico and Canada - could become self-sufficient over the same period of time. Now the IEA predicts that even contributions from Canada and Mexico won’t be necessary. (So does this become a rationale for arguing against the Keystone Pipeline?)
The IEA projections are graphed above. The time scale runs left to right, beginning in 1980 and projecting out to 2035 (with no demarcation for real and projected numbers). The vertical axis measures millions of barrels of oil equivalent per day. Conventional oil is represented by pink, unconventional tight oil - the Bakken Shale and others - as red, conventional natural gas as light purple and unconventional gas – i.e., shale gas – as dark purple.
US oil consumption now runs at about 18 million bbd with 45 percent supplied by imports. US production has edged back toward 10 million bbd, entirely on the growth of unconventional supplies. Conventional oil continues its slow decline toward 5 million bbd so that by 2020 unconventional supplies will equal those of the conventional.
The biggest increase in production, however, is coming from natural gas, which is already close to equaling oil in barrel-equivalents. Once again, the rise has come completely from formerly unconventional supplies – the “fracking” technology that releases gas from deep shale formations. Within five years, fracked gas may be the single largest source of oil-equivalents and could lead US production beyond 20 million bbd by 2020. Beyond that date, the IEA predicts shale gas will continue to produce at the same levels while the other sources will go into slow decline.
The big problem, of course, is that natural gas cannot currently be used to power most transportation vehicles. This leaves our transport sector 70 percent dependent on oil even as gas supplies increase. The biggest challenge of the next decade will be finding ways to employ natural gas in transportation. The auto companies are already producing a small number of compressed natural gas (CNG) vehicles but the most promising avenue may be to convert this gas to methanol, a liquid fuel that easily substitutes for gasoline. (Most Indianapolis 500 cars already run on it.) The biggest impediment is that the Environmental Protection Agency has not written regulations that would allow methanol to be used in automobiles. The Fuel Freedom Foundation and other advocates are urging Congress to pass a Flexible Fuel Act that would force the EPA's hand while requiring the auto companies to manufacture cars that can run on a wide variety of fuels, including methanol. This bill could eventually become one of the biggest legislative items in the next session of Congress.