The U.S. will reach energy independence in about a decade, according to a new report from Wood Mackenzie’s Global Trends Service.
The firm expects that 2025 could mark the first time since 1952 that the U.S. exports more energy than it imports.
Shale oil and gas from fields like the Eagle Ford Shale in South Texas and the Permian Basin in West Texas have been driving domestic production to levels not seen since the 1970s.
“A country can achieve energy independence through two channels, it can either produce more or consume less, and the US is doing both,” said James Brick, senior analyst, in a news release.
In seven years, the U.S. has added 3 million barrels per day of so-called tight oil and 27.5 billion feet per day of shale gas, a 42 percent increase in energy production, the firm said.
Meanwhile, domestic oil demand is dropping as cars and trucks become more fuel efficient.
Energy independence could come even faster than 2025, though.
Things that could tip that import-export balance include the U.S. lifting the crude oil export ban, an increase in shale oil production or lower energy demand from transportation because of increase fuel efficiencies.
Eliminating the crude oil export ban would give producers access to higher priced international markets. An extra $5 per barrel could increase domestic production by 350,000 to 450,000 barrels per day, according to Wood Mackenzie.
“Not all companies would actually benefit from lifting the crude oil export ban,” said Brick. “It’s likely that upstream producers would generally benefit the most via increased volumes and higher prices. Oil field service companies and rig manufactures would also benefit from the additional investment.”
Improvements in technology could double the recovery rate from shale, the company estimates. Companies are working on refracturing existing wells and technology such as enhanced oil recovery.
But there are plenty of uncertainties. Export facilities could get delayed or environmental regulations could slow the industry. Policies could encourage the use of more natural gas in the power sector.
No matter what, the direction of the country is obvious, the firm says.
“Irrespective of the timing of independence, the US has started its transformation from energy consuming giant to prominent exporter,” said Brick. “With this role shift comes obvious economic benefits but also shifting risks and new responsibilities.”