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Once the world’s largest oil buyer, the U.S. could be an energy exporter by 2030 thanks to the soaring increase in tight oil and gas production, according to new estimates from a global consulting firm.

For Alberta, which currently ships almost all its oil and gas exports to the U.S., that prospect could usher in a far different marketplace than exists today.

Wood Mackenzie estimates that because of so-called “tight” oil produced by fracking, more biofuels and reduced demand as cars and trucks are forced to get more miles per gallon, net oil imports to the U.S. will be 3.3 million barrels per day lower in 2030 than they were in 2010.

Tight oil production from just the two major plays in North Dakota’s Bakken and the Texas Eagle Ford is expected to hit 2.5 million barrels a day by 2015, and “we don’t think we are shooting too high with that projection, there is more upside and downside potential for those plays,” said James Brick, a Houston-based energy analyst with Wood Mackenzie.

His report, called The Changing Role of US Energy Trade, notes that while natural gas production is increasing in Canada and the U.S. because of fracking — despite record low prices, the demand for gas in Canada is actually growing faster than production.

“Canadian demand will increase by almost 60 per cent from 2010 to 2030 while production will increase by 40 per cent over the same period. The key driver of Canadian gas demand is the oilsands,” said the report.

If oilsands production increases to 4.6 million barrels per day by 2030 from the current 1.7 mbpd, natural gas demand will grow by 2.1 billion cubic feet per day.

The new reality in the U.S., which historically has had a symbiotic relationship with major suppliers, will have widespread implications for the American economy.

“It will be a very different relationship, and how the U.S. fits into the whole global energy scene,” said Brick.

The goal of energy independence, long a dream of American politicians, is now being discussed in the popular press, he added.

While the U.S. might be an exporter of petroleum products such as gasoline, it will undoubtedly be a significant exporter of natural gas to Mexico and liquefied natural gas (LNG) to Asian markets, where prices for gas are about four times higher than the U.S. There are already three major facilities in the planning stages.

But perhaps the biggest surprise in the Wood Mackenzie report is the future of thermal coal.

Because of tougher environmental regulations over carbon emissions, coal-fired power plants will be more expensive to operate. After 2021, coal generation will actually decrease by 15 per cent, and that will push the coal onto the international market.

And there is one nation that will be willing buyer — China.

By 2030, Wood Mackenzie estimates the U.S. will export 500 million tonnes of coal, and will be the third largest exporter of seaborne coal in the world.

“When you look at China’s energy mix, natural gas is a pretty small proportion today. And even if you were to double or quadruple that, coal is still so much larger in terms of energy content,” said Brick.

He adds that while China is buildings a lot of nuclear and some renewables, they can’t compete with coal.

“It is the cheapest and the path of least resistance.”

Brick says exporting coal and LNG “could impact the U.S. economy in quite a positive way.”

 

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