New extraction methods and infrastructure investments in the U.S. have led to a massive spike in domestic production, with widespread economic impact. With production topping 2.7 billion in 2013, the country is on track to become the world's largest crude oil producer.
This increased output is also occurring at a time when demand is shrinking. These two trends could lead to the U.S. achieving energy independence by 2025, according to a recent Wood McKenzie report.
"A country can achieve energy independence through two channels," wrote James Brick, senior analyst with Wood Mackenzie, in a press release accompanying the report. "It can either produce more or consume less, and the United States is doing both."
Major shale oil plays such as the Bakken and Eagle Ford as well as activity in the Permian Basin have led to the erosion of the ban of crude oil exports. Production in these areas shows no sign of slowing, although they are thought to currently remain under peak production capability. Should exportation increase, the Wood McKenzie report argues that independence could arrive even sooner.
"If crude oil exports resulted in U.S. producers receiving an additional $5 per barrel, production could increase by 350 to 450 thousand barrels per day," Wood Mackenzie reported.
However, cost-effective exportation would require investment in new export facilities and energy policies that support domestic consumption.
As the industry continues to improve the efficiency of its drilling efforts and nears energy independence, some oil and gas companies may need assistance in adjusting to the changes in market demands. Oil and gas strategy consulting can help ensure that crucial eventualities are considered in decision making, and organization are prepared for any changes in regulation.