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Many emerging US fields now commonly considered part of the “shale” boom are not really shale at all, but rather tight oil such as in the Permian Basin or even conventional fields made un-conventional by modern techniques such as horizontal drilling, multistage fracturing that helps draw more oil from rocks and long laterals—the horizontal leg of a well—to enhance their economics.

“Shale is very fine grained…rock,” containing silica, Peng Li, petroleum geologist at the Arkansas Geological Survey, said. According to other sources, it also contains clay and even quartz. On the other hand, other plays being developed unconventionally are carbonates (such as the Permian Basin), sandstone, siltstones, limestone or even mudstone. “The difference is in the type of rock,” Li said.

While the Eagle Ford Shale in South Texas and Bakken Shale in North Dakota/Montana are two of the biggest shale oil plays, wildcatters continue trying to smoke out the next big oil find. There, shale hasn’t been the draw, but rather conventional fields some of which have produced modestly for years.

Company managers are now talking up older fields such as the Woodbine in East Texas, the Brown Dense in Louisiana/Arkansas and the Tuscaloosa Marine Shale in Louisiana/Mississippi as potential up-and-comers.

The Woodbine consists of sandstone and siltstone rocks, located at about 7,400-9,400 foot depths across several counties north of Houston. The formation sits below the Eagle Ford horizon, which some operators say is also potentially productive in that area. For that reason, many operators call it the Eaglebine play.

But according to oil companies, the Eagle Ford zone there is shallower than in south Texas where production is galloping. Eaglebine wells have approached initial production rates of a solid 1,000 b/d of equivalent oil in some cases; small operator Crimson Exploration, for instance, has seen rates above 1,200 boe/d. The company has said other zones may also be productive.

Global Hunter Securities cited a Devon Energy well that debuted at 936 boe/d from the Georgetown formation, while tiny Navidad Resources has vertically commingled the Buda, Georgetown and Glen Rose formations and “has produced 135,000 boe in a year,” or about 370 boe/d.

The Woodbine also has favorable well costs around $5.5 million versus $6-$7 million in the South Texas Eagle Ford, companies have said.

- The Brown Dense play is an old play made up of carbonate mudstone found at roughly 8,000-12,000 feet depths. Southwestern Energy, which pioneered the Fayetteville Shale, is a leader in this play also. It has drilled six wells, all but one in Louisiana.

One of the wells came in at over 1,000 boe/d of output that included 421 b/d of oil. The company is targeting sections 300-500 feet thick.

CEO Steve Mueller said in an August company call that its Brown Dense wells could cost $10-$12 million, topping initial $8 million estimates due to higher-than-expected well pressures. “When you start looking at how that works out on the economics, I think [a] 500-barrel-a-day range on the oil-only side still makes that work,” Mueller said.

- The Tuscaloosa Marine Shale is a shale, found between 10,000 to more than 16,000 foot depths with thickness varying from between 500 feet in Louisiana to over 800 feet in Mississippi, according to a report released earlier this year by David Dismukes, associate executive director of the Center for Energy Studies at Louisiana State University.

Tuscaloosa operator Devon Energy so far has drilled three wells in the play; the first averaged just shy of 300 b/d and the second, 670 b/d—an improvement, which company officials say they hope to sustain. Because of the depth, wells are costly at $12 million to the mid-teens. “Reducing costs and improving well performance over time are keys to making this play economic,” said David Hager, Devon executive vice president of E&P.

- Then there is an apparent one-man shop in an acreage spread west of Houston called the Navarro/Midway field. Said GHS in a recent report, “nobody else is leasing here, but [Halcon Resources CEO Floyd Wilson] liked this play so much he leased it personally” after selling his former company, Petrohawk Energy, last year. Petrohawk in 2008 pioneered the Eagle Ford Shale; BHP Billiton gobbled up the company for $15 billion.

The Navarro/Midway are two formations; Halcon has targeted both in vertical wells which require multistage fracturing to make them economic, Wilson said at a recent energy conference. The company has drilled two wells there; both should unearth a mix of oil, natural gas and gas liquids, he said.

Navarro is the deeper zone that may hold more gas and less oil; Midway has “a lot more oil and a little less gas,” said Wilson. “I’m expecting big numbers.”

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During America’s Age of Imperialism, Henry Cabot Lodge famously said that “commerce follows the flag.” Send over U.S. gunships, and U.S. business will be right behind.

These days it may be the reverse. America’s shale oil and gas revolution—one of the biggest commercial bonanzas in generations—is itself shaking up the world order.

As oil and gas flood into U.S. pipelines, relationships that defined how energy moved around the globe are shifting. How far that will go is open to debate. A U.S. that no longer defends Saudi Arabia? A China with dominion over the Middle East?

“It’s already had an impact,” says Ed Morse, an energy expert at Citigroup C -1.09% . “In the geopolitics of energy, there are always winners and losers. The U.S. is going to win big, and someone else is going to lose big.”

The U.S. is already getting a lift. In 2005, it imported 60% of its oil. That’s down to roughly 42% now. The losers: the Middle East, Africa and Venezuela, sometimes unpredictable suppliers that over the years brought us oil shocks and price spikes. Though the oil market is global and an oil-field strike abroad can still raise prices here, America’s vulnerability to shaky regimes and despots is declining.

If the U.S. begins exporting its gas in earnest, Europe too may taste a bit more energy freedom. It’s currently shackled to the whims of Russia’s Gazprom, OGZPY -0.10% the dominant gas supplier to the region. Moscow loves that leverage: In January 2009, during a spat with Ukraine, it cut gas to a large chunk of Europe, leaving industry to ration energy and households to shiver.

Gas exports could also give the U.S. a new card to play in trade talks.

“The value of a free-trade agreement with the U.S. just went up a heck of a lot for some countries,” says Karan Bhatia, a former deputy U.S. trade representative who is now a General Electric GE +0.76% executive. Nations wanting access to gas through a free-trade agreement may now cede greater market access to U.S. business.

When the U.S. consumes its own oil, it drains less from global markets, leaving more for others. That can also have a big political payoff.

“Had it not been for this growth in U.S. production, the sanctions on Iran could not have been as successful,” says Daniel Yergin, author of “The Quest: Energy, Security and the Remaking of the Modern World.” The increase in U.S. production since 2008, he says, is equal to roughly 80% of what Iran was exporting before the sanctions. Countries that normally bought from Iran can find oil elsewhere. “It’s an example of the geopolitical impact of this renaissance in energy production.”

Other nations are trying to catch up. China is exploring its own shale reserves through a partnership between Sinopec and Chevron CVX +1.07% . But Rex Tillerson, CEO of Exxon, has said shale-gas development in China will take more time. In Central Europe, too, exploration is sluggish because of the geology of the region, the cost, and environmental concerns.

“There is a huge difference between the U.S. and the rest of the world,” George Kirkland, vice chairman of Chevron, told The Wall Street Journal in June. “You know a lot more about the actual geology” in the U.S.

Mr. Morse says the U.S. leads for other reasons, too. Along with Canada, Australia and the U.K., it has what many other countries don’t: fast-moving independent oil drillers willing to take risks, and capital markets willing to finance them. The resulting speed and innovation are tough for other countries to match.

That said, world order doesn’t trend in a straight line.

The U.S. will still be the cop on the beat protecting sea lanes, allies and the global economy, military experts say. But there are other kinds of influence.

“So the ships coming out of the Persian Gulf will turn left instead of right,” says John Hofmeister, former head of Shell’s operations in the U.S. “China will suck up the Mideast production the U.S. doesn’t need. That may reduce the leverage the U.S. thinks it ought to have in the Mideast if China becomes a bigger customer.”

Frank Verrastro, of the Center for Strategic and International Studies, similarly feels it is “premature” to herald a new U.S.-centric energy world. Countries like Russia have vast reserves and will help shape the global energy market for years to come, he says.

The politics at home are also a wild card. The U.S. must still address the laws prohibiting or heavily regulating the export of oil and gas. Some businesses, such as Dow Chemical, DOW -0.26% want to keep the gas at home to cheaply fuel manufacturing here. And environmental groups, worried about climate change, fear that more gas and oil production would take the nation’s eye off critical goals, such as expanding the use of solar and other renewable energy.

This week, the Department of Energy demonstrated why the new balance of power in energy remains in flux. Several companies have requested permission to export liquefied natural gas from the U.S. The DOE has been studying the matter and now says its report is delayed until the end of the year—likely after the presidential election.

But these problems seem like luxuries compared with the oil shocks America has endured over the years. The U.S. is clearly empowered by its new energy bonanza. Commerce just got a big tailwind. And that will give the flag a lift, too.

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The U.S. Chamber’s Institute for 21st Century Energy today launched a major new campaign focused on building support for utilizing shale energy resources in Ohio.

The “Shale Works for US” campaign is a national effort designed to build support for the vast economic and energy security benefits of natural gas and oil produced from shale.  The Institute for 21st Century Energy is the energy policy arm of the U.S. Chamber of Commerce, the world’s largest business organization.

“Shale energy has the potential to be an economic game changer for America and for Ohio,” said Karen Harbert, president and CEO of the Energy Institute.  “Ohioans are already beginning to see the benefits of shale development, but much more shale energy sits below the surface.  The Shale Works for US campaign will help educate the public and the business community and demonstrate the ways in which increased shale production will benefit communities across the Buckeye state.”

Almost twenty percent of the Marcellus shale formation — one of the world’s largest — is in Ohio.  Development of shale energy is expected to bring more than 65,000 jobs; contribute $4.86 billion to Ohio’s economy; and result in $3.3 billion of labor income (an average of $50,225 per job) by 2014, according to the Ohio Shale Coalition.

“Oil and natural gas production in Ohio is not new, but recent advances in technology will allow for vast quantities of recently discovered shale energy to be produced in a safe, environmentally responsible way,” said Linda Woggon, executive director of the Ohio Shale Coalition and executive vice president of the Ohio Chamber of Commerce. “This production will not only create jobs for Ohioans, but generate new revenues for localities throughout our state, meaning more money for education and public safety and lower residential property taxes.”

Nationally, the Shale Works for US campaign will build a network of communities, businesses and policymakers throughout the states and at the federal level to support the economic, job creation and energy security benefits generated by shale energy.

The Shale Works for US campaign will include extensive grassroots recruitment, advertising, and educational outreach to businesses and community groups.  Initially, similar efforts are underway in Pennsylvania and West Virginia with plans to expand across the country.

The mission of the U.S. Chamber of Commerce’s Institute for 21st Century Energy is to unify policymakers, regulators, business leaders, and the American public behind a common sense energy strategy to help keep America secure, prosperous, and clean.

Through policy development, education, and advocacy, the Institute is building support for meaningful action at the local, state, national, and international levels.

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Oil from the Gulf of Mexico as a proportion of U.S. output has fallen to a 14-year low as the shale boom shakes up traditional production patterns, reducing the impact of hurricanes on national supplies.

The CHART OF THE DAY shows that the Gulf will account for 21 percent of domestic output this year, the lowest level since 1998, based on Energy Department data. The Gulf represented 29 percent of production in 2009, the most since at least 1993.

Output from federal waters in the Gulf of Mexico will average 1.32 million barrels a day this year, down 15 percent from 1.56 million in 2009, the Energy Department said in its July 10 Short-Term Energy Outlook. Photographer: Susana Gonzalez/Bloomberg

Growth in output from shale-rock formations in the U.S., including the Bakken in North Dakota, has bolstered inland supplies. North Dakota pumped 609,000 barrels of oil in April, up 74 percent from a year earlier, according to department data.

“The Gulf is becoming less important, and it reduces the impact of storms,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “Onshore production has been rising while the Gulf of Mexico output has been falling, and that really amplifies the percentage change.”

Oil prices jumped 14 percent in August 2005 as Hurricane Katrina shut platforms in the Gulf of Mexico. Output from federal waters in the Gulf will average 1.32 million barrels a day this year, down 15 percent from 1.56 million in 2009, the Energy Department said in its July 10 Short-Term Energy Outlook.

The U.S. will produce 6.31 million barrels of oil a day this year, the highest level since 1997, according to department estimates. Output in the lower 48 states, excluding the Gulf, will average 4.45 million, up 41 percent from 2009.

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Devon Energy Corporation (DVN) is a leading independent energy company that is engaged in the exploration and development of natural gas liquids. For the first quarter of 2012, the company reported earnings per share of $1.05 per share against an EPS for the fiscal 2011 of $6 per share. First-quarter revenues of $2.5 billion were down more than 3% on a year on year basis and the revenues for the full year 2011 were $11.45 billion.

Gross margin at 66.4% was down, but operating margin at 28.4% – which was 1.5% better than the comparable quarter in the previous year. Net margin at 15.7% was down by 2.3%. Net earnings for the quarter were $393 million and cash flow generation was $1.4 billion, which is a 3% increase over the comparable quarter in the previous year. The strong showing for the quarter was partly due to the increased production of liquids for the sixth consecutive quarter at 256,000 Boe per day.

Devon is performing well and shareholders showed their appreciation for the company and its management with strong support for all the proposals of the company at its annual meeting. The company has gained a foothold in most of the significant gas plays in the US such as the Mississippian, the Utica, the Permian, and the Barnett as well as oil sands and liquid natural gas developments in Canada.

Within the United States, the company appears to be focusing on the Utica and the Cline. Devon estimates that each well drilled in the Cline formation, which is rich in oil and liquid gas, could produce 570,000 boe, with flow rates up to 600 boe per day in the first month, at a cost of $6.5 million per well. Devon estimates that each well drilled in the oil and liquid gas rich Cline formation could produce 570,000 boe, with flow rates up to 600 boe per day in the first month, at a cost of $6.5 million per well. In this respect, the company is ahead of its competitor Laredo Petroleum Holdings (LPI) because it already has 500,000 net acres over the Cline, on which it plans to drill 15 wells this year.

After a period of activity in Ohio on the Utica Shale, residents and regulators alike are beginning to move against the outburst of fracking with both regulation and litigation. New drilling rules for operators include full disclosure of chemicals used for fracking as well as the usage of water. A proposal to tax high producing wells still remains on the table for the future and should come as a relief to Devon – which has high producing assets. Meanwhile, Chesapeake (CHK) has announced that it is looking for a buyer for over 300,000 acres on the Utica and it is possible that Devon, which has the resources, may strike a favorable deal with Chesapeake.

While competitors such as Cabot Oil & Gas (COG), Comstock Resources (CRK), and Canadian Natural Resources (CNQ) are going ahead with new exploration plays, Devon continues to be in a strong position because of its discipline in holding on to its capital until it is time to spend on projects that are worthwhile. With rock bottom prices in natural gas, the company wisely continues to concentrate on opportunities in oil and natural gas liquids. It is focused on the North American continent in onshore areas ranging from the Canadian Arctic to the Gulf Coast.

Another major asset that Devon owns is the 13 million net acres that it holds, of which two-thirds has not been developed yet. One of the most prized regions for Devon is the Permian Basin in Texas and New Mexico, where it has currently deployed 21 rigs against Apache (APA) with 31 rigs in the basin and Concho Resources (CXO) with 37 rigs. Devon has also begun drilling for light oil in the Cline Shale, which is a part of the Permian Basin, and aims to produce 70,000 barrels of oil-equivalent a day by year 2015.

The company has sold off some of its offshore assets and some of the money raised has gone to repay some debt and to repurchase shares worth about $3.5 billion. It still has $7.1 billion in cash and equivalents to finance further capital expenditure. Among its promising new plays is the Niobrara Shale is in the Denver-Julesburg Basin stretching between Northeast Colorado, Northwest Kansas, Southwest Nebraska, and Southeast Wyoming and where Devon has acquired about 100,000 net acres in far Southeast Wyoming.

In addition, Devon is one of the largest natural gas producers in Montana where it has 1.2 million acres under lease and should be in a position to benefit when gas prices begin to recover. In addition, there are the Jackfish 1 and Jackfish 2 oil sands projects in Canada. This third Jackfish project is about half complete.

Devon was recently named among Fortune Magazine’s World’s Most Admired Companies list for the sixth year in the row. The magazine also noted that the company ranks Number 1 in the “mining/crude oil production” category for social responsibility. This is in all likelihood due to its efforts aimed at promoting CNG and LNG as alternative fuels for vehicles.

Despite all this, I would hesitate to recommend Devon as a buy at this particular point in time. I would look for favorable indications for future growth, such as a recovery in global oil demand or a recovery in North American gas prices before buying this stock. However, you should watch developments closely and hold your existing investment position until more favorable buying opportunities present themselves.

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The development of unconventional natural gas resources in the lower 48 states supported 1 million jobs in 2010, and that total will grow to 1.5 million by 2015 and to more than 2.4 million by 2035 according to new research from IHS Inc. commissioned for America’s Natural Gas Alliance (ANGA), an association of 30 of North America’s largest independent natural gas producers. ANGA’s members include Chesapeake Ene

rgy Corp. (NYSE: CHK), EOG Resources Inc. (NYSE: EOG), Anadarko Petroleum Corp. (NYSE: APC), Devon Energy Corp. (NYSE: DVN), Apache Corp. (NYSE: APA), and Range Resources Corp. (NYSE: RRC).

Unconventional natural gas production in the US will account for two-thirds of all natural gas production by 2015 and nearly 80% of all production by 2035. But the increase won’t come cheaply — the industry is expected to invest $3.2 trillion by 2035 to develop unconventional resources. The report defines “unconventional natural gas” as shale gas, tight sands gas, and coal-bed methane.

The report identifies 20 states that produce unconventional gas, and these states account for 826,000 of the 1 million jobs counted for 2010. Non-producing states (including the District of Columbia) account for about 18% of the created jobs that the report calls “suppliers in unconventional gas expansion.”

The top ten states for jobs in unconventional gas production in 2010 were:

Texas — 288, 222 jobs

Louisiana — 81,022 jobs

Colorado — 77,466 jobs

Pennsylvania — 56,884 jobs

Arkansas — 36,698 jobs

Wyoming — 34,787 jobs

Ohio — 312,462 jobs

Utah — 30,561 jobs

Oklahoma — 28,315 jobs

Michigan — 28,063 jobs

The top ten states account for nearly 75% of the jobs in producing states and almost 70% of the 1 million job total. Those percentages remain fairly constant through 2035.

The report estimates that unconventional gas production will contribute $174 billion to US GDP in 2015 and $41 billion to federal revenue in the same year. The way the revenue is spread around will change, though, according to the report:

[T]raditional oil and gas states like Texas and Louisiana will lead the way in terms of the economic benefits they will receive from unconventional gas activity. However, by 2015, many of these economic benefits—including employment (268,000), value added to GDP ($22 billion), and tax revenue ($8 billion)—will be realized in states that do not have any unconventional gas production activity (“non-producing” states), but instead will benefit from the purchases of supplies and services from businesses across the United States.

The question, of course, is whether or not the jobs and the revenue are sufficient to offset the costs that the rest of us pick up to support the drilling and fracking that unconventional gas production needs.

A recent report on the benefits of fracking conducted by a new research group at the State University of New York at Buffalo, the Shale Resources and Society Institute, has received criticism for having an industry bias. The university claims that funds for the study came from institutional funds, but admits that the new institute is seeking natural gas industry sponsors.

The IHS/ANGA report will only stoke up the fires of contention between producers and their critics. But with millions of jobs at stake, the industry has firmly put its thumb on the scale.

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The petroleum industry’s accomplishments in wresting oil and natural gas from tight shale formations virtually assures plentiful supplies for coming generations.

The bad news is prices for fuel are likely to range from high to higher.

Oil producers are proving there’s a way to extract petroleum from hard rocks, but they are gambling real money to do it.

A conventional vertical well can cost from $2 million to $3 million, according to Davis L. Ford, a consulting environmental engineer and board member of Clayton Williams Energy.

But the horizontal wells hydraulically fractured to release oil and gas from across a shale formation take $7 million to $8 million.

Ford and Mohamed Soliman, chairman of the petroleum engineering department at Texas Tech, met recently in a conference room to share their thoughts about the future of petroleum.

Energy independence

They foresee nothing short of achieving energy independence for the United States through the new high technology available to oil and gas producers.

“Some people usually discuss, will the United States become self-sufficient in energy,” said Soliman, a former engineer with the Halliburton Co. “Not in oil. That’s never going to happen. But if we can use gas in transportation, then we can get there.”

Ford said, “What I hear from talking to large companies like Exxon and small companies like Clayton Williams … I’m hearing energy independence — forgetting about the amount of oil and gas — in 10 years.”

Ford suspects natural gas will become the dominant fuel in a few years. “It’s prolific, clean and available. We’re in a technological transformation like I’ve never seen in my lifetime.”

The engineers think natural gas will be adopted first by the trucking industry because of the rising cost of diesel fuel, and then automobiles will follow.

Soliman said of the new petroleum extraction technology, “This is actually very exciting. There are a lot of things going on.”

Is this going on all over the Permian Basin?

“It’s going on all over the world,” Soliman said. “I was in Vienna in Austria, and they have a company now drilling for gas in shale — in Vienna!”

Large reserves

Ford sees petroleum reserves lasting for a long time.

“When I’m around people like Dr. Soliman, and people from large and small companies, they’re all saying about the same thing: Our proven reserves — which means the bank will loan you money on them — our proven reserves in this country are almost 200 years. In Poland they are saying 300 years. Now that’s a guess, but when I was a young engineer, I would say in the 1970s and 1980s, our proven reserves were guesstimated to be at the most 20 or 25 years.”

Soliman, laughing at that past estimation, said, “We thought by the time we retired there would be no oil.”

Is there no end to it, then?

“Well … I can’t say that,” Soliman answered.

“Everything has an end,” Ford said.

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The reversal of fortune in America’s energy supplies in recent years holds the promise of abundant and cheaper fuel, and it could have profound effects on what people drive, domestic manufacturing and America’s foreign policy.

Cheaper fuel produced domestically could reduce the cost of shipping and manufacturing, trim heating and cooling bills, improve the auto market and provide tens of thousands of new jobs.

It might also pose new environmental challenges, both predictable and unforeseen, by damping enthusiasm for clean forms of energy and derailing efforts to wean the nation from its wasteful energy habits.

But for Americans battered by rising gasoline prices, frustrated by the dependence on foreign oil, skeptical of the benefits or practicality of renewable fuels and afraid of nuclear power, the appeal of plentiful domestic oil and gas could far outweigh the costs.

Just a few years ago, the dominant theme in discussions about energy was of declining production and the fear of running out of oil. Even today, political tensions in the Middle East, particularly in the Persian Gulf, have fanned fears of supply disruptions that are keeping prices high.

But a new boom in energy production in recent years has upended these expectations in record time. High energy prices led to a wave of successful oil and gas exploration in North America, including in fields that were deemed uneconomical only a few years ago. Using techniques like horizontal drilling and hydraulic fracturing, oil companies are tapping into deeply buried reserves in shale rocks and in the ocean’s depths.

The surge in energy prices, along with a recession and new government rules that tightened fuel-economy standards, led to a sharp cutback in gasoline consumption. This decline in demand in the last five years reversed decades of almost uninterrupted growth that made the United States the world’s top energy consumer, accounting for one in every four barrels of oil burned around the globe.

The North American energy revival is primarily the result of so-called unconventional sources of energy — like shale oil and shale gas across the United States, oil sands in Canada and deepwater production in the Gulf of Mexico. In the last five years, the United States and Canada combined have become the fastest-growing sources of new oil supplies around the world, overtaking producers like Russia and Saudi Arabia.

“The transformation unfolding in North America represents a potentially decisive shift in the history of energy,” Rex Tillerson, the chairman and chief executive of Exxon Mobil, who is not usually given to hyperbole, said in a speech in Houston last month.

Ed Morse, head of global commodity research at Citigroup and a longtime energy analyst, says North America has the potential to become a “new Middle East.”

“The reduced vulnerability of North America — and the world market — to oil price spikes also has deep consequences geopolitically, including the reduced strategic importance to the U.S. of changes in oil- and natural gas-producing countries worldwide,” Morse said in a recent 92-page report called Energy 2020. “Pressures toward isolationism in the U.S. will likely grow, with consequences for global stability that can only just begin to become understood.”

“The only thing that could stop this is politics — environmentalists getting the upper hand over supply in the U.S., for instance,” the report said.

The new supplies ensure that the United States will remain well entrenched in oil, but the continuing reliance on fossil fuels also carries significant environmental concerns — whether from the risk of offshore drilling, or the hazards, many still unknown, of hydraulic fracturing. It also means that greenhouse gas emissions will most likely increase, at least until carbon emissions are capped or new technology to store carbon dioxide underground is developed.

Supply and demand

The glut of natural gas supplies cuts two ways on emissions. It has effectively put an end in the United States to any new investment in coal plants, which produce much more emissions. But it also makes the economics of alternative, noncarbon energy sources like wind power or solar power difficult to justify without public support and subsidies.

Regardless of the environmental impact, there is no guarantee that new supplies will inevitably lead to lower gasoline prices, as proponents of unfettered domestic drilling argue. Oil is a global commodity with a price set on the global market. With rising demand around the world, particularly in emerging economies, and instability in many oil-producing countries, many analysts predict global oil prices will remain volatile — and high — for many years to come.

And with gasoline prices above $4 a gallon, the nation’s energy resources remain a polarizing topic, pitting Republicans against Democrats, environmentalists against oil companies, and conservationists against advocates of unfettered drilling.

“It is remarkable how quickly perceptions have changed,” says Guy Caruso, the administrator of the U.S. Energy Information Administration from 2002 to 2008, who is now at the Center for Strategic and International Studies. “We may be in the early stage of this transformation, and clearly things could still go wrong.”

Energy production is an inherently risky business, but recent history suggests that when resources are available they end up being developed.

After the explosion of BP’s deepwater well two years ago in the Gulf of Mexico, leading to the biggest oil spill in American history, the Obama administration imposed a moratorium on offshore drilling. But it took only about a year for exploration and production to resume offshore.

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; it also calls into question talk of a nuclear revival in the United States.

Economists say that ample gas supplies might also provide the basis for a resurgence of U.S. manufacturing, which has been battered by high energy costs for much of the last decade.

Natural gas prices have fluctuated wildly in recent years, rising to $14 for a thousand cubic feet from $2 within a few years. The current glut, however, has driven prices back down again, to near $2 for a thousand cubic feet.

With America becoming one of the top natural gas producers, some domestic companies might rethink moving parts of their business to countries with cheaper energy costs. (At current consumption rates, U.S. gas reserves would last at least 75 years, an estimate some experts say is conservative.)

Lower natural gas costs would also have cascading benefits to other commercial sectors, like retailing. Shipping costs may be lower, particularly if transportation companies shift their fleets to natural gas-powered or electric vehicles. FedEx, for instance, has already been adding clean energy trucks to its fleet, including hybrid and all-electric delivery trucks in cities like Chicago.

Economic growth

Citigroup estimates that as many as 3.6 million new jobs might be created by 2020 thanks to the energy boom. The current trade deficit might fall by 60 percent by the end of the decade from today’s level, according to the bank’s estimates, and the dollar could appreciate by as much as 5.4 percent as imports shrink.

“In a world of high energy prices, the potential economic activity generated by this wave of new hydrocarbon production is extraordinary and should strongly boost national output, increase incomes, create wealth, stimulate consumption and create jobs,” according to Citigroup.

Given how swiftly expectations have shifted to describe America’s energy prospects, however, some caution may be warranted.

Opposition from environmental groups and concerns about climate change — which is caused by increased carbon emissions from fossil fuels — could lead to tighter regulation of petroleum products or derail infrastructure projects like pipelines.

That is what has happened to the extension of the Keystone XL Pipeline, which its supporters say is needed to increase the import of oil from Canada’s oil sands into the United States. That project has faced stiff opposition from environmental groups because oil sands are more energy-intensive and emit more carbon dioxide into the atmosphere than traditional oil sources.

Geologists have long known that shale basins across the country, 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 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 just a few years. Production at Eagle Ford produced just 787 barrels in 2004. Last year, its production reached 30.5 million barrels, according to state regulators, and it is still growing. Natural gas production there went from nothing to 243 billion cubic feet in just three years. The National Petroleum Council, an industry-led group that provides advice to the secretary of energy, recently outlined its view of how the nation’s larger-than-expected resource might be developed.

In a major study released last year, the group forecast that North American oil production might exceed 20 million barrels a day by 2035 under a “high potential” situation of unfettered access.

However, under a “limited” situation where production was constrained for a variety of environmental or political reasons, domestic supplies might fall to less than 10 million barrels a day.

Some experts are more bullish. Morse of Citigroup 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 9 million barrels a day in 2011.

If that trend continues, the growth in oil and natural gas supplies in the next decades could turn the United States into a top energy exporter, rivaling some members of the Organization of the Petroleum Exporting Countries. Natural gas could be sold to Mexico and Canada (because exploiting oil sands is so energy-intensive, Canada might have to import natural gas to produce its oil). Refined petroleum products, and even crude oil, could find customers in Europe and Latin America. Coal could be exported to China.

With less gasoline demand, the nation’s surplus refining capacity means the United States is already exporting petroleum products — like gasoline and diesel. The United States is now the top exporter of refined products, just ahead of Russia.

Energy independence

Assessing falling American dependence on foreign oil, analysts with the financial firm Raymond James said imports fell from 65 percent of 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. They predicted that 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.

“The resulting savings from the standpoint of the trade deficit are highly meaningful,” the analysts said, “especially when the benefits of cheaper energy for domestic manufacturing are taken into account. Maybe the real question is, When will Washington apply to join OPEC?”

While the question is provocative, the change in outlook for domestic supplies, along with the changed role of the United States in global energy markets, carries important economic and geopolitical lessons.

James Brick, an energy analyst with Wood Mackenzie, a research firm, said in a recent report that by 2030 the United States could end up exporting 500 million tons of coal a year, 3.2 billion cubic feet a day of natural gas and 2.5 million barrels a day of oil products.

“The United States will be playing a very different role on the energy markets, a much more international role and a much more complicated and sophisticated one,” said Brick. “As with any forecast there are uncertainties but no matter how you cut it, the United States has the resources in the ground.”

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