Houston Chronicle | July 5, 2016 | Colin Eaton
Breakthroughs in drilling technology, many pioneered by Texas companies, may have finally toppled the global order in energy.
American drillers' ability to squeeze oil and gas out of once impenetrable shale rock has given the United States the largest recoverable oil reserves in the world, surpassing both Russia and Saudi Arabia, according to a new study by the Norwegian consultancy Rystad Energy.
It's a milestone that forecasts greater power and influence in global markets for U.S. producers, which have long been buffeted by the decisions and actions of Saudi Arabia and Russia, analysts said.
"The U.S. will surpass them as not only the largest resource holder but also the largest producer of oil," said Jarand Rystad, founder and managing partner of the consultancy. "It'll happen by 2020 for sure."
The independent, three-year analysis by Rystad Energy found that the nation's recoverable oil reserves have climbed to 264 billion barrels - including 60 billion in Texas - overtaking Russia, with 256 billion barrels, and Saudi Arabia, with 212 billion barrels. Recoverable reserves are the oil deposits that can be extracted within the industry's financial and technological constraints.
Rystad's findings are another example of the profound impact of the so-called shale revolution, which by opening vast new reserves of oil and gas, have transformed the United States from net importer to net exporter, and remade global energy markets. Less than a decade ago, analysts were predicting severe shortages and $200 a barrel oil; today the world is awash in gas and oil, a glut that has led prices to crash and turned a boom into a bust.
Oil prices fell to as low as $26 a barrel in February. U.S. crude settled at $46.60 a barrel in New York on Tuesday.
U.S. producers to rebound
The oil-market crash induced a $1 trillion pullback in drilling activity over the past two years, taking scores of North American drillers with it. Continental U.S. oil production has fallen by more than 800,000 barrels a day since it peaked in April 2015, and it's expected to keep dropping until prices recover further.
But those cutbacks in production, coupled with growing global demand, could leave the world undersupplied by 5 million to 10 million barrels a day by the end of the decade, Rystad said. Over time, U.S. oil producers could take advantage of the gap in energy supply and demand because they're faster than other producers, given the right mix of time and money.
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