This item from Brian Hicks in his energy newsletter spells it outpretty clearly. The advent of horizontal fracking combined with fullcompletion along the entire reservoir bore length has turned over theapple cart. The low hanging fruit has turned out to be the largedepleted and well explored legacy reservoirs in the USA. We are nowreally going after all that stuff we walked away from decades ago.
What this all means is that the North American market can exit theglobal oil market and in fact begin supplying oil in competition toAsia and Europe. The same technology will soon intrude into theEuropean environment and allow them to slash their imports also. Atworst, Europe will continue to be supplied out of Russia. Thus thetwo most developed markets are in position to be come self sufficientin terms of oil production itself.
That pretty well allows the huge developing markets of India andChina a free hand to tap the global market. In fact suppliers thathave failed to develop a healthy internal market will find themselvesat a huge disadvantage.
In my wildest dreams, I did not expect to see the developed worldexit the global oil market itself before it actually exited the oileconomy itself and because of runaway production in the USA. Yet that is what seems to be happening
OPEC Surrenders
By Brian Hicks |Thursday, November 15th, 2012
After a century ofdominance in the fossil fuel industry, traditionally mined crude oilhas finally met its match.
Last weekConocoPhillips CEO Ryan Lance predicted North America — thebirthplace and currently the most aggressive exploiter of shale oiland gas production — could be energy self-sufficient by the year2025.
When this happens, itwill mark a dramatic shift in the global energy balance... and thefirst time since the early 1990s that a majority of our fossil fuelsupply didn't come from overseas sources.
While this may notexactly be earth-shattering news to people who follow the industryclosely, it was last week's admission by the other side of the oilsupply coin, namely OPEC, that has effectively put another nail inthe coffin of traditionally-produced foreign crude.
In its annual WorldOil Outlook report, OPEC analysts cut their forecast of global oildemand due, in large part, to an increased supply from nationsoutside the 12-member cartel infamously known for their strangleholdon traditional crude oil reserves.
You may recall myarticle last week. I talked about how Texas is now producing more oilthan three OPEC members... and is quickly closing in onfour more.
For reasons morepolitical than scientific, OPEC has been a holdout in acknowledgingthe importance — and eventual dominance — of shale oil and gas.
According to thereport, by 2025 shale oil will contribute two million barrels per dayto global supply — about the same as the national production levelof OPEC member Nigeria, Africa's biggest oil producer.
Perhaps the mostpainful admission of all for OPEC is conceding that this newgeneration of oil will be coming exclusively from North Americansources at least through the middle of the next decade.
Tempering this somberrevelation, OPEC secretary General Abdullah al-Badri stated toreporters that his organization is not concerned about these changesin the supply chain, citing a growing global demand that will absorbthe higher production rates without destabilizing prices.
But OPEC's own recentrevisions in demand forecasts through 2016 indicate this confidenceis more posture than concrete.OPEC analysts havecalculated spare capacity is expected to rise, reaching five millionbarrels per day by 2014 at the latest, with the gap growing evenwider moving forward.
Supplying close toone-third of the world's oil and holding 80% of traditional crudereserves, this latest forecast paints a picture of decline for amulti-national economic structure which remains, as it has alwaysbeen, reliant on the abundance of a single finite commodity.
However, what's badnews for OPEC may prove to herald a new golden age of energyabundance in the West...
Previous estimates hadpegged this total at 2.1 trillion barrels — still many timesgreater than necessary to permanently unseat OPEC as the singlebiggest name in the global oil supply game.
Although technologicalcapability has yet to bring this massive potential to 100% productioncapacity, it is now clear beyond a doubt where the future of globalfossil fuel power will migrate.
So, where does thisleave us?
If the recent economicbooms around the Williston Basin and Eagle Ford regions, theepicenters of the North American oil revival, are any indicator...
It puts us at thestart of a very exciting and potentially lucrative period in Americanhistory.
Boasting a negativeunemployment rate and a building boom to rival those that came withthe first oil revolutions of the early 20th century, the NorthDakotan mining industry provides us with a signpost of things tocome.
Similar revivals arealready taking shape as far east as Pennsylvania and Ohio, as well asup North in Alberta and Ontario.
If you haven't seenpictures of the shale oil boom in North Dakota and Texas,this videois a great place to start.
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