|Fracking FAQ: The science and technology behind the natural gas boom.|
New technologies to access hard-to-reach fuels mean that, in 2012, the United States experienced its largest rise in annual oil output since the middle of the 19th century, according to data from the US Energy Information Administration (EIA) released in December. Shale gas is a fossil fuel trapped inside formations of shale rock. Some of these formations also contain oil.The time frame is what makes this interesting.
The expected 760,000 barrel-per-day increase in US crude oil production in 2012 is the largest rise in annual output since the beginning of US commercial oil extraction in 1859, an EIA official said in a statement.
"This is a once in a lifetime thing we are experiencing now," Paul Faeth, a senior fellow with the CNA research organisation, told Al Jazeera. "The chemical industry is moving back to the US [because of cheap gas] and demand will increase because of low prices."
The gas boom has led to about $90bn in new investments in related US industries over the past two years, including steel manufacturing, petrochemicals production and fertiliser fabrication, according to Dow Chemical's calculations.
Since 2005, more than $125bn has been spent on shale extraction, including drilling and purchasing land, by the 50 largest US oil and gas companies, according to a study by Ernst and Young.
High prices over the past decade, the flow of petroleum from east to west, and the gush of money the other way has allowed Russia to re-assert its international clout and Gulf states to build up massive sovereign wealth funds. The shale boom has the potential to derail those trends.
In 2011, members of the Organization of Petroleum Exporting countries (OPEC) earned $1,026bn in net oil export revenue, a 33 percent increase over 2010, the US Energy Information Administration reported in May. If the price of oil drops because of new supplies, or if natural gas starts to eat into demand for traditional crude, oil-rich nations could potentially find themselves significantly less well-off.
"There will be significant impacts for security and global politics," Faeth said of the shale boom.
Thanks largely to fracking, the US is set to overtake Saudi Arabia and Russia to become the world's biggest oil producer by 2017, according to a November report from the International Energy Agency (IEA).There are a lot of unknowns with fracking, and there is quite a bit of risk in the technology. I also do not want to minimize nor trivialize the impacts of fracking on the environment either, specifically the relative unknowns as it relates to water supply. Still, if you were the guy suggesting the US could potentially be energy independent of Middle East oil by 2017, you were likely the guy in the room everyone else thought was crazy in 2007. This is a reminder why a decade can be a very long term when discussing major economic and geopolitical shifts.
I think potential energy independence from Middle East exports by 2017 is a pretty big deal, indeed I believe such an achievement would force a significant reevaluation of current strategic posture, particularly in regards to the Middle East. I highly recommend folks read the entire article, particularly down further in the article where a discussion of how this might impact global oil prices and what exports of natural gas from super-tankers originating from the US that can carry LNG might mean.