There is a shift in the attention of oil production within our global industry away from the conglomerate oligopoly of OPEC. Within this month crude oil prices in the United States are settled at $90.66 per barrel. The U.S. Energy Information Administration (EIA) reported this price to be over $10 less than a year ago. This drop in prices at a time when crude oil usually jumps due to high summer demand is a sign of the United States utilizing and discovering other markets of crude oil production that are more efficient than OPEC. The EIA made out the report this month that six Persian Gulf suppliers provide just 22 percent of all U.S. imports.
Specifically, there are a few main entities responsible for the U.S. decline in OPEC demand. Canada is the top gun with its Alberta Tar Sands and the Keystone XL pipeline project that estimates to provide 400,000 barrels a day after the company responsible for the project, TransCanada, passes its reviewed route permit to the Obama Administration as well as the Nebraska State Legislature. If the permit is approved in hopefully the summer or fall of this year, then production of the line will begin promptly around 2015 as reported by the estimates from TransCanada.
With the exportation of 2,207,000 barrels of crude oil a day to the United States, Canada is the top provider of oil to the U.S. according to the EIA. Canada, as well as Brazil and Colombia have increased exports to the United States by 700,000 barrels daily and now provide nearly 3.4 million barrels a day. The actions of accessing oil reserves have veered from deep well drilling to accessing oil from less costly surface deposits such as tar sands or oil shales. More press releases are coming out of the fracking projects with oil shale rock within the Dakotas. The use of hydraulic fracturing has increased oil production in North Dakota from a few thousand barrels a day a decade ago to nearly half a million barrels today. Shale oil is closer to the surface making it more accessible and less costly to refine. Conservative reports estimate that the practice of fracking could amount to 3 million barrels a day by 2020. Utilizing smaller wells of oil is now the next move by one of the U.S.’s leading companies in oil refinement, Shell.
Early this week Shell was given the okay by the Obama Administration to begin analyzing the tundras of the northern Alaskan Yukon for oil wells that are only within 150 feet of water. Given that trying to pump oil from Alaska has been politically one of the most tiring debates our nation has had over the past few decades, nonetheless, this project is apart of Shells new search for smaller wells in less populated ecosystems. The Obama Administration believes that by putting more efforts into the inhabited Yukon, accidents within the oil refinement process will never be as catastrophic as the BP Oil Spill was for the Gulf.
The United States went from importing 60 percent of its liquid fuels in 2005 to 45 percent last year. This 15 percent decrease in demand is staggering considering the bounce back from the BP Oil spill which only was less than two years ago. Nonetheless, the EIA report “Petroleum production in countries other than Iran” made the notion that the U.S. has had a significant increase in the global markets. The report stated that, “The biggest recent increases in non-OPEC production have taken place in North America. Over the last two months, the broadest measure of liquid fuels production in the United States, which includes production of natural gas liquids, condensates, bio-fuels, and refinery gains, as well as crude oil, was 10.6 million bbl/d, an increase of 0.7 million bbl/d and 0.9 million bbl/d from its year-ago and 2009-2011 averages, respectively.” The reason behind the US decline in the import of liquid fuels is subject to multiple causalities such as automotive industry improvements in fuel consumption, the increase in bio-fuels and clean energy, and the discoveries at home as well as abroad of promising statistics.
From Alberta tar sands, midwestern shale deposits, or Alaskan shallow wells, the United States is beginning to utilize domestic as well as closer to home entities for oil discovery and business. Within the past few years, South America has risen as a major contributor to the worlds oil market. The South American countries of Colombia, Brazil and Argentina have drawn most of the worlds attention with new discoveries and new regulations within their oil industries. Argentina specifically shocked the market with its nationalization of one of the nation’s largest oil production sites and ousting the oil company YPF. This act by President Cristina Hernandez de Kirchner puts the full potential of business with Argentinean at question however, the exports from the Spanish Oil conglomerate Repsol predict the Neuquen Province in Argentina could be holding 23 billion barrels in oil and gas deposits. Drilling in the region right now ranges from closely 200 wells, however, Guillermo Coco, energy minister of Neuquen province, reported to the Washington Post that rumors of more than 10,000 wells are planned to be drilled within the province over a span of 15 years. However these are projections and cannot be for certain, nonetheless the growth of discovery ranges out to the Falkland Islands as well as large deposits in Colombia and Brazil still lie with more liberty to be marketed.
The countries of South America have made multiple discoveries of significant commodities such as gold and silver, therefore the discovery of crude there is not an “if” but a “when” factor. The United States’ objectives to lesson drilling in the Gulf and to utilize the Alaskan north as well as the North Dakota shale deposits show significant measures in regaining energy independence with petroleum products. Canada’s rising use of the Alberta Tar pits will connect the Gulf refineries with a vital source of easily accessible deposits of crude.
The tides of oil discovery and import are on the change. As more discoveries are made closer to home the United States could be seeing a shift to narrowing its independence on Arabian Oil and emerging once again as an even stronger competitor in the global market of oil.