This year, the U.S. will likely surpass Russia and Saudi Arabia as the largest liquids fuel producer in the world.


From previously challenging the “tyranny of oil,” newly inaugurated U.S. President Barack Obama enters his second term in office as leader of a potential oil and gas superpower.

According to BP’s Energy Outlook 2030, unconventional sources will make the United States virtually energy self-sufficient by 2030, largely thanks to the shale gas revolution.

“The U.S. will likely surpass Russia and Saudi Arabia in 2013 as the largest liquids producer in the world (crude and biofuels) due to tight oil and biofuels growth…. Russia will likely pass Saudi Arabia for the second slot in 2013 and hold that until 2023. Saudi Arabia regains the top oil producer slot by 2027,” the London-based oil and gas giant said.

The U.S. Energy Information Administration (EIA) has forecast that the nation could become a net exporter of liquefied natural gas (LNG) as early as 2016, and a net exporter of total natural gas (including via pipelines) by 2020.

For the Asia-Pacific region, potential U.S. gas exports could undercut higher priced gas from Australia and elsewhere, resulting in lower fuel bills for major importers such as Japan and South Korea.

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However, fast-growing China and India are expected to become even more reliant on imports to satisfy domestic demand, BP said in its report.

With the world’s population seen reaching 8.3 billion by 2030 and income doubling in real terms from 2011 levels, BP expects an additional 1.3 billion people will require energy. This will result in global energy demand being 36 percent higher in 2030 compared to 2011, with almost all growth (93 percent) coming from non-OECD economies.

The Asia-Pacific region will produce the most rapid growth in energy production, largely from coal, generating 35 percent of global energy production by 2030.


The report states that unconventional sources such as shale gas, tight oil, heavy oil and biofuels will transform the energy balance of the United States.

“By 2030, increasing production and moderating demand will result in the U.S. being 99 percent self-sufficient in net energy; in 2005 it was only 70 percent self-sufficient,” it said.

Production from unconventional sources will provide all the net growth in global oil supply to 2020, and more than 70 percent of the growth to 2030.

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“Fears over oil running out – to which BP has never subscribed – appear increasingly groundless,” BP’s group chief executive Bob Dudley said. “The U.S. will not be increasingly dependent on energy imports, with energy set to reinvigorate its economy.”

Aided by gains in technology, the U.S. shale gas boom has already cut household energy bills by an estimated U.S. $1,000 a year and spurred a wave of industrial investment, reversing a 30-year trend of declining manufacturing jobs.

According to Bloomberg News, at least five new U.S. steel plants are planned that would use gas instead of coal to purify iron ore, including a U.S. $750 million Louisiana plant by Nucor Corp.

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Chemical and fertilizer companies are also reportedly planning new gas-fueled plants, with some analysts saying cheap energy could result in a “re-industrialization” of the United States.

While major shale gas and tight oil resources exist elsewhere, including in Australia, BP’s report noted that significant exploitation had thus far only occurred in North America, due to a range of market factors.

In a statement, BP group chief economist Christof Rühl said: “Vast unconventional reserves have been unlocked in the U.S., with oil production following gas. This delivery has been made possible not only by the resources and technology, but also by ‘above-ground’ factors such as a strong and competitive service sector, land access facilitated by private ownership, liquid markets and favorable regulatory terms.


“No other country outside the U.S. and Canada has yet succeeded in combining these factors to support production growth. While we expect other regions will adapt over time to develop their resources, by 2030 we expect North America still to dominate production of these resources.”

Fossil fuels dominant

President Obama’s call in his second inaugural address for action on climate change has also received assistance from the gas boom.

In the United States, according to the Environmental Protection Agency (EPA), natural gas-fired power plants produce around half as much carbon oxide emissions, less than a third as much nitrogen oxides, and one percent as much sulfur oxide as coal-fired plants. In light of this, the New York Times reports that the EPA is planning tighter emission standards to force power generators to switch from coal to gas.

The National Resources Defense Council estimates that emissions from current coal-fired plants could be cut by more than 25 percent by the end of this decade, helping the U.S. president achieve a pledge of reducing total domestic emissions by about 17 percent from 2005 levels by 2020.

Yet the oil and gas boom will see fossil fuels remain dominant in the U.S. energy mix, with renewable energy’s share of total electricity generation forecast to rise from 13 percent in 2011 to just 16 percent in 2040, according to the EIA.

Based on BP’s forecasts, the world’s continued reliance on fossil fuels will see global greenhouse gases exceed recommended levels above 450 parts per million of carbon-dioxide equivalent.

BP estimates oil, gas and coal will each command market shares of around 26 to 28 percent by 2030, with non-fossil fuels such as nuclear, hydro and renewables remaining at around 6 to 7 percent each.

Despite reduced energy intensity, growth in renewables and substitution of coal with gas, carbon dioxide (CO2) emissions are still forecast to increase by 26 percent from 2011 to 2030.

“Most of the growth will come from non-OECD countries, so that by 2030 70 percent of CO2 emissions are expected to come from outside the OECD,” BP said.

Renewables are anticipated to be the fastest growing source of energy, growing by 7.6 percent a year, but are only expected to provide 11 percent of global electricity production by 2030, up from 3 percent in 2011.


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Despite recent smog, China’s efforts to improve energy use are seen resulting in lower coal demand from 2020 and improved global energy intensity. Without the improvement, BP said the world would need to almost double energy supply by 2030.

Changing energy mix

Natural gas is expected to be the fastest growing among fossil fuels at 2 percent a year, with shale gas seen supplying 53 percent of U.S. gas production by 2030. Coal growth will slow to 1.2 percent a year, with India overtaking the United States as the second-largest coal consumer by 2024 behind China.

Oil demand will increase at just 0.8 percent a year, with its share of energy consumption falling to 28 percent by 2030. All net oil demand growth will come from outside the OECD, with half coming from China, India, and the Middle East alone.

Despite the Fukushima disaster, nuclear energy output is expected to grow by 2.6 percent a year, compared to an average growth rate of 1.6 percent over the last two decades. 88 percent of growth in nuclear energy will come from China, India and Russia. By 2026, China is seen overtaking the United States as the largest producer of nuclear power. Four years later Beijing will account for 30 percent of nuclear energy production, according to BP.

While long a major coal exporter, Australia is forecast to overtake Qatar as the largest LNG supplier by 2018, accounting for a quarter of global production by 2030.

However, U.S. gas exports to Asia could undercut Australian LNG exports, while aiding major importers such as Japan and South Korea.

According to Japanese daily Asahi Shimbun, the subject of U.S. gas exports to Japan has already been raised in top-level talks between the two allies, with Japan eyeing lower costs to manufacturers and households along with a reduced trade deficit.

The United States may reap the gains, but Asia’s policymakers face a careful balancing act in ensuring the region benefits rather than paying the price of the energy revolution.