The IAEA report last year that the U.S. would become the world’s biggest oil producer by 2020 doesn’t necessarily “foretell the end of Saudi Arabian energy dominance,” argues John Sfakianakis in Foreign Policy.
Even though shale has pushed U.S. oil production up 43 percent since 2008, there are just too many variables, Sfakianakis says. Among them: “Demand will have to continue to decline due to efficiency gains.”
Other reasons to be skeptical include:
- “Unconventional oil might not necessarily lead to lower prices at the pump.”
- The shale oil fields that produce 80 percent of U.S. output — the Bakken in North Dakota and Montana and the Eagle Ford in Texas — are already petering out. Bakken slipped “to one fifth of its original rate within 24 months,” and Eagle wells “could reach the end of their economically useful life within four years.”
He cites a report by J. David Hughes, a geoscientist. “Drill, Baby, Drill” notes that shale gas:
production has been on a plateau since December 2011; 80 percent of shale gas production comes from five plays, several of which are in decline. The very high decline rates of shale gas wells require continuous inputs of capital—estimated at $42 billion per year to drill more than 7,000 wells—in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion.