US To Overtake Saudi Arabia

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The US has a huge market for naturalgas merely displacing coal burning plants. This happened before when fuel oil exited the market after the first oilcrisis in the early 70’s.  Thatpossibility was just never available until recently because of fracking.  What is clear is that the US oil industryis getting the chance now to fully restructure ahead of the outright shift awayfrom hydrocarbons.
Not mentioned is that the equallyrapid rise of Canadian production will quickly drive non North American oil outof the USmarket.   This means the rest of theworld is able to access this no longer needed production just as they demandit.  There will certainly be no more warsover oil in reality, because all this production technology will soon enough beapplied elsewhere as needed.  China, Indiaand Europe have all lucked out.
Coal is toast with the advent ofplentiful natural gas and quick and easy in terms of switching as new tightreserves are exploited. 
Other technologies that are priceeffective are also beginning to break into the market, but what matters is thatthe hydrocarbon bridge is turning out to be completely real and available. 
The big danger for my readers isto understand that everyone is underestimating the speed of roll out.  It is historic and it also means a great dealof capital is going to be stranded.  Coalplants and Nuclear plants are all subject to been put on the chopping blockwhatever the local twisting and turning. This is an era in which you wish to be careful just where your long termmoney is invested as utility are deeply loved and there will be painfuladjustments although they are wonderfully positioned to ride out the changes.  Recall AT&T and its long grindingtransition out of its legacy asset portfolio.
U.S. to overtake Saudi as top oil producer: IEA
By Peg Mackey 
http://ca.finance.yahoo.com/news/u-overtake-saudi-top-oil-producer-iea-132331660.html
LONDON (Reuters) - The United Stateswill overtake Saudi Arabiaand Russia as the world'stop oil producer by 2017, the West's energy agency said on Monday, predicting Washington will comevery close to achieving a previously unthinkable energy self-sufficiency.
The International Energy Agency (IEA) said it saw a continued fall in U.S. oil imports with North America becoming anet oil exporter by around 2030 and the United States becoming almostself-sufficient in energy by 2035.
"The United States, which currently imports around 20percent of its total energy needs, becomes all but self-sufficient in net terms- a dramatic reversal of the trend seen in most other energy importingcountries," it said.
The forecasts by the IEA, which advises large industrialized nations onenergy policy, were in sharp contrast to its previous reports, which saw Saudi Arabiaremaining the top producer until 2035.
"Energy developments in the United States are profound and their effect will be felt wellbeyond North America - and the energy sector," the IEA said in the annuallong-term report, giving one of the most optimistic forecasts for U.S.energy production growth to date.
"The recent rebound in U.S. oil and gas production, driven byupstream technologies that are unlocking light tight oil and shale gasresources, is spurring economic activity - with less expensive gas andelectricity prices giving industry a competitive edge," it added.
IEA Chief Economist Fatih Birol told a news conference in London he believed the United States would overtake Russia as the biggest gas producerby a significant margin by 2015. By 2017, it would become the world's largestoil producer, he said.
This could have significant geopolitical implications, if Washington feels its strategic interests are no longer asembedded in the Middle East and other volatileoil producing regions.
Analysts ask whether an energy independent United States would still be prepared to safeguard major traderoutes around the world, such as the Strait of Hormuz in the Middle East.
The United Stateswill rely more on natural gas than either oil or coal by 2035 as cheap domesticsupply boosts demand among industry and power generators, the IEA said.
LIMITED KNOWLEDGE
Birol said he realized how optimistic the IEA forecasts were given thatthe shale oil boom was a relatively new phenomenon.
"Light, tight oil resources are poorly known ... If no newresources are discovered (after 2020) and plus, if the prices are not as highas today, then we may see Saudi Arabia coming back and being the first produceragain," he said.
The IEA said it saw U.S.oil production rising to 10 million barrels per day (bpd) by 2015 and 11.1million bpd in 2020 before slipping to 9.2 million bpd by 2035.
Saudi Arabian oil output would be 10.9 million bpd by 2015, the IEAsaid, 10.6 million bpd in 2020 but would rise to 12.3 million bpd by 2035.
That would see the world relying increasingly on OPEC after 2020 as, inaddition to increases from Saudi Arabia, Iraq will account for 45 percent ofthe growth in global oil production to 2035 and become the second-largestexporter, overtaking Russia.
OPEC's share of world oil production will rise to 48 percent from 42percent now.
Russian oil output, which over the past decade has been steadily aboveSaudi Arabia, is predicted to stay flat at over 10 million bpd until 2020, whenit will start to decline to reach just above 9 million bpd by 2035.
"Russia, which remains the largest individual energy exporterthroughout the period, sees its revenues from oil, natural gas and coal exportsrise from $380 billion in 2011 to $410 billion in 2035," the IEA said.
The U.S. oil boomwould accelerate a switch in the direction of international oil trade, the IEAsaid, predicting that by 2035 almost 90 percent of oil from the Middle Eastwould be drawn to Asia.
ENERGY DEMAND GROWS BY THIRD
The report assumes a huge expansion in the Chinese economy, which itsaw overtaking the United States in purchasing power parity soon after 2015 andby 2020 using market exchange rates. Chinese real gross domestic product isexpected to increase by 5.7 percent annually between 2011 and 2035.
A rise of 1.8 billion in the world's population to 8.6 billion wouldlead to a spike in global oil demand by more than a 10th to over 99 million bpdby 2035, keeping pressure on oil prices, the IEA said.
The agency's central "New Policies" scenario, which assumes arange of measures are taken to curb oil consumption in Europe, the UnitedStates, China and elsewhere, sees the average import cost of oil rise to justover $215 per barrel by 2035 in nominal terms, or $125 in 2011 terms.
If fewer steps are taken to promote renewable energy and curb carbondioxide emissions, oil was likely to exceed $250 per barrel in nominal terms by2035 and reach $145 in real terms -- almost level with the record highs seenfour years ago.
The share of coal in primary energy demand will fall only slightly by2035.
Fossil fuels in general will remain dominant in the global energy mix,supported by subsidies that, in 2011, jumped by almost 30 percent to $523billion, due mainly to increases in the Middle East and North Africa.
(Reporting by Dmitry Zhdannikov, Peg Mackey and Christopher Johnson;Writing by Dmitry Zhdannikov; Editing by Christopher Johnson and William Hardy)