The US an oil super-power? It may sound incredible, but if oil industry sources are to be believed there is intense speculation that this might just be so. As a result of new technology it is now possible to drill for oil where previously it was thought impossible. This new technology is referred to as hydraulic ’fracking’ and horizontal drilling. This is a process whereby water under very high pressure is pumped into the well and which then breaks up shale and other rock formations which then releases millions of tons of oil and natural gas trapped inside.
Geologists in the United States have long known that shale basins across the United States, like the Bakken field in North Dakota, Eagle Ford and Barnett in Texas, and the Marcellus in the northeast, held tremendous oil and gas reserves. But energy companies had no economic way to collect them until new technology recently changed all that. The results have been impressive. Production from the Bakken region alone has gone from negligible quantities to 500,000 barrels of oil a day in the last few years. Similarly oil production at Eagle Ford had been negligible and which was estimated at just about 787 barrels in 2004. Last year, its production reached 30.5 million barrels, according to local state regulators, and it is still growing. Natural gas production there went from nothing to 243 billion cubic feet in just three years. Some experts are even more bullish and have forecast that North American oil production could reach an astounding 27 million barrels a day by 2020, almost twice the rate of production of 15 million barrels a day at the end of 2011. Production from the United States could grow to 15.6 million barrels a day by 2020, up from nine million barrels a day in 2011.
As the position stands today the United States is already in a position to reduce the demand for oil imported from abroad to fulfil its domestic needs. Presently the United States consumes nearly 25% of the total world production. Imports by the United States fell from 65 percent of total domestic demand, or 13.5 million barrels a day, their peak in 2005, to 9.8 million barrels a day in 2011, or 52 percent of demand. Oil industry experts predict that US imports would keep falling, reaching 4.5 million barrels a day - or just a quarter of domestic oil demand - by 2015. By 2020, they forecast, the United States would not need to import foreign oil anymore. This very welcome situation has also developed due to better performance and less guzzling of ’gas’ by new model automobiles and with the advent of the internet less urge to travel by Americans.
If what is predicted were to come true it would have profound political and economic repercussions. For one the dependence of the United States on Middle East oil would turn negative. Successive US Administrations over the years have made the unfettered access to Middle-East oil a point of vital States has steadily lessened its dependence on Middle East oil by importing oil from outside this area principally from Venezuela, Nigeria, Canada and Mexico. Saudi Arabia is the only Middle-East country that figures in the list of top five exporters of oil to the United States. With the dependence on Middle-East oil turning negative, the US will probably lose interest and will become even less prone to interfere in the internal affairs of the region. Certainly it will be less prone to undertake any military adventures of the type witnessed when it intervened in Iraq. As most countries, both exporters and importers of Middle-East oil, have largely traded under the security umbrella of the US; a whole new ball game might emerge.
Another far reaching development that might emerge would be that sentiment in the United States towards isolationism and neutralism would probably become more pronounced. While it is difficult to envisage a total withdrawal of interest in the affairs of the world, yet the propensity to send US troops abroad would be severely curtailed. The US would probably not fight the wars of ’ideology’- to save the world from communism that it did in the aftermath of the Second World War. Nevertheless selective action as it does at present would probably continue; the battle against terrorism and states that provide succour to terrorists still has to be won.
Economically too there could be significant changes within the United States. Cheaper energy costs- particularly for natural gas - would benefit a variety of domestic industries, like chemicals, pharmaceuticals and fertilizers. The rise in natural gas production has already led many utility companies to shift their electrical production away from coal. With what the world witnessed as the tsunami struck Japan most people would to question the talk of a nuclear revival in the United States. It is quite possible that progress towards better technology in the fields of solar and wind power that might make them viable alternative sources might just be retarded. Some economists feel that ample gas supplies might also provide the basis for a resurgence of American manufacturing, which has been battered by high energy costs for much of the last decade.
Nevertheless it is time for national security analysts around the world to at least begin assessing the future possibilities in the light of recent new technological developments within the United States.
Whatever policy the US follows will undoubtedly have world-wide repercussions!
* The author is a former Secretary, Ministry of External Affairs.
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