(John Kemp is a Reuters columnist. The views expressed are his
By John Kemp
LONDON, April 9 The United States has replaced
OPEC as the marginal petroleum supplier to the world thanks to
the shale revolution and improvements in automotive fuel
Net U.S. imports of crude and products have halved over the
last five years, or by an amount equivalent to the entire daily
crude exports of Saudi Arabia.
Net imports totalled 5.2 million barrels per day at the
start of 2014, down from 11.2 million at the beginning of 2009,
according to the U.S. Energy Information Administration (EIA).
Not one barrel of U.S. shale oil has been sent overseas
(except small quantities to Canada) because of the long-standing
ban on crude petroleum exports.
But increased U.S. production is still playing a role on
global markets via a reduction in its crude imports and
increased exports of refined products such as gasoline and
GRAPHIC: Shale revolution alters global energy flows:
U.S. refiners and traders are successfully arbitraging
around the ban by replacing imports of foreign crude with
cheaper domestic oil and turning domestic crude that cannot be
exported into refined products that can.
Total imports of crude and products shrank to an average of
9.8 million barrels per day in 2013 from a peak of 13.7 million
Over the same period, product exports climbed to 3.6 million
barrels per day from 1.1 million. Diesel exports doubled, while
exports of gasoline, liquefied petroleum gas (LPG) and petroleum
coke all recorded big increases.
The big three suppliers of crude to the United States -
Canada, Mexico and Saudi Arabia - all maintained their sales
volumes, according to a recent briefing paper published by the
EIA ("U.S. crude oil imports fall but share of top three
suppliers highest in four decades" Apr 4).
But imports from other countries in the Middle East, West
Africa and Latin America have been squeezed hard, forcing them
to turn to alternative markets in Asia.
And on the products side, the United States has sharply cut
gasoline imports from Europe and emerged as a major diesel and
LPG supplier to countries in Latin America and further afield.
The North American energy revolution and rapid
industrialisation in Asia have effectively reversed the flow of
energy round the globe. For most of the 20th century, the
primary flow was from East to West. Now the main flow is from
West to East.
The shale revolution has also shifted the marginal source of
supply from the Middle East, Africa and Latin America, where
investment and production are tightly controlled by governments,
to Texas, Oklahoma, North Dakota and other states, where
production is driven by the private sector.
Not since the mid-1980s, when new oil fields came onstream
in the North Sea, Alaska and the Soviet Union, have world oil
supplies been so diversified.
With diversification comes greater security. Global oil
markets have weathered the loss of millions of barrels per day
from Libya, Syria, South Sudan and Iran over the last three
years with almost no impact on prices or the availability of
NEW ERA OF SHALE
Some analysts question whether the gains in U.S. shale
output can be sustained or replicated in other countries, where
the conditions both above and below ground are very different.
The hunt for shale opportunities in the rest of the world to
match the quality of U.S. plays has so far proved disappointing,
according to the head of exploration at Norway's Statoil
But the shale revolution is just beginning. By coupling
hydraulic fracturing and horizontal drilling with better use of
seismic surveys, U.S. shale producers are cutting costs and
focusing their drilling programmes more efficiently. Well
productivity is still rising.
In the rest of the world, development continues to be
hampered by lack of specialist crews and equipment, opposition
from environmental campaigners, and the absence of the small
entrepreneurial oil producers and private mineral rights that
underpinned the North American shale boom.
Each of the barriers is in fact an opportunity to drive
significant production if it can be overcome. The potential is
enormous. Shale technology is becoming more mature. Skills are
beginning to diffuse. And the financial incentive is strong.
Shale's transformative impact in the United States is
already exerting a strong pull on policymakers and production
companies elsewhere. New shale developments seem likely to
emerge in China, Ukraine, South Africa, the United Kingdom,
Argentina and other countries by the end of the decade, provided
oil prices remain above $100 per barrel.
Advances in production technology are remaking the world
petroleum market. If the four decades between the 1970s and the
2000s were the era of the Middle East and OPEC, the next two
decades will be the era of North America and shale.
(editing by Jane Baird)