The United States will be a net exporter of natural gas by 2020, and will be almost entirely energy independent by 2035, according to a new report from the International Energy Agency that also calculated subsidies to the global fossil fuel industry to be worth $523 billion in 2011.
The forecast represents a major challenge to Canada’s oil and gas exporters, who will have to find new markets — presumably in Asia — should the U.S. no longer need to import fossil fuels.
The IEA is optimistic about that possibility, projecting that oilsands exports will nearly triple by 2035, to 4.3 million barrels per day from 1.6 million at present.
But the agency's forecast is based on the assumption Canada will find new markets for its oil. It says that time is rapidly approaching because “without new export capacity, western Canadian oil production would exceed regional consumption and current export capacity before 2016.”
The IEA report also noted that subsidies to fossil fuels were worth a total of $523 billion in 2011, a 30-per-cent jump over 2010. The agency said the increase was mainly due to a ramp-up in subsidies by Middle Eastern and north African countries.
Canada subsidizes its oil industry to the tune of nearly $3 billion annually. The U.S. oil industry gets about $7 billion in tax breaks annually, but estimates on total subsidies vary widely.
Critics argue the highly profitable industry needs no subsidies at all, but politicians and the industry say they help to keep local oil and gas industries competitive at the global level, and ensure creation of new jobs in the industry.
The government of Prime Minister Stephen Harper has said it plans to eliminate oil subsidies, but that hasn't transpired yet.
Thanks to hydraulic fracturing, or fracking, the U.S. has seen an explosion in oil and natural gas production in the past several years, with production growing to its highest level in 14 years earlier this year, at around 6 million barrels produced per day.
And by 2035, the U.S. will be the world’s largest oil producer, topping Saudi Arabia, which currently produces about 10 million barrels per day, the IEA projected.
That represents "a dramatic reversal of the trend seen in most other energy-importing countries," the Paris-based agency said in its report. "Energy developments in the United States are profound and their effect will be felt well beyond North America — and the energy sector."
Rebounding U.S. oil and gas production is "steadily changing the role of North America in global energy trade," the report stated.
However, the IEA’s numbers assume that fracking will become commonplace in the oil industry. That’s far from certain, given the political opposition to the practice.
With claims accumulating that fracking is causing health problems through potential pollution of the water table, and concerns being raised about the process potentially causing earthquakes, many jurisdictions are holding off on allowing the practice.
New York state is deliberating whether to continue a four-year-old moratorium on fracking. Quebec's Liberal government suspended extraction of shale oil last year, pending more data on the fracking process, and its new Parti Quebecois government has hinted at making the moratorium permanent.
Alternative extraction methods are changing the face of the global energy industry in unexpected ways.
While the U.S. is headed towards being the world’s biggest oil producer, the current holder of that crown, Saudi Arabia, may be headed in the other direction. A report from Citigroup earlier this year suggested that, with the country’s energy consumption growing at twice the rate of population growth, it could become a net importer of oil within 20 years.
For Canada, the return of U.S. oil production has meant that Canadian exporters are selling at a “discount rate” to the U.S., as demand for Canadian product falls. Reports indicate Canada is selling oil at $30 below the going rate for West Texas intermediate crude.
Faced with this reality, Canada’s government and its industries are looking to Asia for new markets. But that avenue is also fraught with risks, as environmentalists raise concerns about increased tanker traffic on the west coast, and about the pipelines needed to carry oil and gas there.
Canada continues to push the U.S. to approve the Keystone XL pipeline, a decision on which the Obama administration delayed last year to past the 2012 elections. Washington insiders suggest the State Department will likely give the project the go-ahead.
While the debate over Keystone has become a flashpoint between environmentalists and energy development proponents, it’s likely, given current projections, that the pipeline will be used not to send Canadian oil to U.S. markets, but to ship to U.S. ports for export overseas.
— With files from the Associated Press
PRO: Potential Energy Independence
Estimates by the <a href="http://www.eia.gov/pub/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/current/pdf/arrsummary.pdf" target="_hplink">United States Department of Energy</a> put the number of recoverable barrels of shale gas at around 1.8 trillion. To put that into perspective, Saudi Arabia is estimated to have roughly <a href="http://www.opec.org/opec_web/en/data_graphs/330.htm" target="_hplink">2.6 trillion barrels of oil reserves</a>. Christopher Booker writes for <em>The Telegraph</em><a href="http://www.telegraph.co.uk/comment/columnists/christopherbooker/8500496/Shale-gas-could-solve-the-worlds-energy-problems.html" target="_hplink"></a> that there are enough world reserves to "keep industrialised civilisation going for hundreds of years"
CON: Water Pollution
A <a href="http://switchboard.nrdc.org/blogs/amall/incidents_where_hydraulic_frac.html" target="_hplink">blog post by the Natural Resource Defense Council</a> explains that "Opponents of such regulation [of fracking] claim that hydraulic fracturing has never caused any drinking water contamination. They say this because incidents of drinking water contamination where hydraulic fracutring is considered as a suspected cause have not been sufficiently investigated." It then goes on to list more than two dozen instances of water pollution to which hydraulic fracking is believed to have contributed. A <a href="http://insideclimatenews.org/news/20111104/gasfrac-propane-natural-gas-drilling-hydraulic-fracturing-fracking-drinking-water-marcellus-shale-new-york" target="_hplink">new waterless method of fracking</a> has been proposed, but environmentalists are skeptical.
CON: Leaks More Emissions Than Coal
Methane is a greenhouse gas and <a href="http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-natural-gas-works.html#enviroimpacts" target="_hplink">major component of shale's carbon footprint</a>. Cornell Professor Robert Howarth said about a study he conducted, "Compared to coal, the footprint of shale gas is at least 20 percent greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years."
PRO: Burns Cleaner Than Other Fossil Fuels
<a href="http://www.scientificamerican.com/article.cfm?id=natural-gas-could-serve-as-bridge-fuel-to-low-carbon-future" target="_hplink">Researchers at MIT found that</a> replacing coal power plants with natural gas plants could work as part of a plan to reduce greenhouse emissions by more than 50 percent.
CON: Hydraulic Fracking Has Been Linked To Earthquakes
<a href="http://oilprice.com/Energy/Natural-Gas/U.S.-Government-Confirms-Link-Between-Earthquakes-and-Hydraulic-Fracturing.html" target="_hplink">Several earthquakes both in the U.S. and abroad </a> have been linked to the hydraulic fracturing process. One British company, <a href="http://www.cuadrillaresources.com/cms/wp-content/uploads/2011/11/Cuadrilla-Resources-Press-Release-02-11-11.pdf" target="_hplink">Cuadrilla Resources</a>, admitted in a report that its hydraulic fracturing process well "did trigger a number of minor seismic events."
<a href="http://www.treehugger.com/fossil-fuels/facts-on-fracking-pros-cons-of-hydraulic-fracturing-for-natural-gas-infographic.html" target="_hplink">The industry currently employs more than 1.2 million people</a> in the U.S., and the Department of Energy estimates that natural gas resources have increased nearly 65 percent due to fracking, according to a TreeHugger graphic. Additionally, <a href="http://www.bu.edu/energy/files/2011/07/Fracking-article-Sept-14-2011.pdf" target="_hplink">the gas industry accounts for about $385 billion</a> in direct economic activity in the country, a <em>Nature</em> piece reports.
CON: Companies Don't Have To Disclose Chemicals Used In Process
<a href="http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroreg.cfm" target="_hplink">Fracking is exempt from the Safe Drinking Water Act of 2005</a>, thus allowing companies to conceal the chemicals used in the process.
PRO: Buys Time To Develop Renewable Energy
Former chief of staff to President Clinton and former head of the Center for American Progress <a href="http://www.businessweek.com/magazine/could-shale-gas-reignite-the-us-economy-11032011_page_2.html" target="_hplink">John Podesta says natural gas can serve</a> "as a bridge fuel to a 21st century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels."
CON: Requires Large Amounts Of Water
The fracking process can require around <a href="http://www.hydraulicfracturing.com/Water-Usage/Pages/Information.aspx" target="_hplink">five million gallons</a> of water. In some cases<a href="http://www.treehugger.com/fossil-fuels/facts-on-fracking-pros-cons-of-hydraulic-fracturing-for-natural-gas-infographic.html" target="_hplink"> less than a third of that water is recovered</a>.
Brand value: $418 million Photo: Randy Eresman, president and CEO of Encana Natural Gas (The Canadian press) Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
9. Canadian Natural Resources
Brand value: $702 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $933 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $936 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $1.109 billion Photo: Brian Ferguson, president and CEO of Cenovus Energy (The Canadian Press) Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $1.47 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $1.607 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $1.831 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
2. Esso (Imperial Oil)
Brand value: $1.849 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Brand value: $4.726 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>
Syncrude Upgrader and Oil Sands
The refining or upgrading of the tarry bitumen which lies under the oil sands consumes far more oil and energy than conventional oil and produces almost twice as much carbon. Each barrel of oil requires 3-5 barrels of fresh water from the neighboring Athabasca River. About 90% of this is returned as toxic tailings into the vast unlined tailings ponds that dot the landscape. Syncrude alone dumps 500,000 tons of toxic tailings into just one of their tailings ponds everyday.
Boreal Forest and Coast Mountains / Atlin Lake, British Columbia | 2001
This area, located in the extreme northwest of British Columbia, marks the western boundary of the Boreal region. On the border of the Yukon and Southeast Alaska, the western flank of these mountains descends into Alaska's Tongass Rainforest and British Columbia's Great Bear Rainforest. Far from the oil sands, the greatest remaining coastal temperate and marine ecosystem is imminently threatened by the proposal to build a 750-mile pipeline to pump 550,000 barrels per day of oil sands crude to the coast. Once there, it would be shipped through some of the most treacherous waters, virtually assuring an ecological disaster at some point in the future.
Tailings Pond in Winter, Abstract #2 / Alberta Tar Sands | 2010
Even in the extreme cold of the winter, the toxic tailings ponds do not freeze. On one particularly cold morning, the partially frozen tailings, sand, liquid tailings and oil residue, combined to produce abstractions that reminded me of a Jackson Pollock canvas.
Aspen and Spruce | Northern Alberta | 2001
Photographed in late autumn in softly falling snow, a solitary spruce is set against a sea of aspen. The Boreal Forest of northern Canada is perhaps the best and largest example of a largely intact forest ecosystem. Canada's Boreal Forest alone stores an amount of carbon equal to ten times the total annual global emissions from all fossil fuel consumption.
Tar Sands at Night #1 | Alberta Oil Sands | 2010
Twenty four hours a day the oil sands eats into the most carbon rich forest ecosystem on the planet. Storing almost twice as much carbon per hectare as tropical rainforests, the boreal forest is the planet's greatest terrestrial carbon storehouse. To the industry, these diverse and ecologically significant forests and wetlands are referred to as overburden, the forest to be stripped and the wetlands dredged and replaced by mines and tailings ponds so vast they can be seen from outer space.
Dry Tailings #2 | Alberta Tar Sands | 2010
In an effort to deal with the problem of tailings ponds, Suncor is experimenting with dry tailings technology. This has the potential to limit, or eliminate, the need for vast tailings ponds in the future and lessen this aspect of the oil sands' impact.
Tailings Pond Abstract #2 | Alberta Tar Sands / 2010
So large are the Alberta Tar Sands tailings ponds that they can be seen from space. It has been estimated by Natural Resources Canada that the industry to date has produced enough toxic waste to fill a canal 32 feet deep by 65 feet wide from Fort McMurray to Edmonton, and on to Ottawa, a distance of over 2,000 miles. In this image, the sky is reflected in the toxic and oily waste of a tailings pond.
Confluence of Carcajou River and Mackenzie River | Mackenzie Valley, NWT | 2005
The Caracajou River winds back and forth creating this oxbow of wetlands as it joins the Mackenzie flowing north to the Beaufort Sea. This region, almost entirely pristine, and the third largest watershed basin in the world, will be directly impacted by the proposed Mackenzie Valley National Gas Pipeline to fuel the energy needs of the Alberta Oil Sands mega-project.
Black Cliff | Alberta Oil Sands | 2005
Oil sands pit mining is done in benches or steps. These benches are each approximately 12-15 meters high. Giant shovels dig the oil sand and place it into heavy hauler trucks that range in size from 240 tons to the largest trucks, which have a 400-ton capacity.
Oil Sands Upgrader in Winter| Alberta Oil Sands | 2010
The Alberta oil sands are Canada's single largest source of carbon. They produce about as much annually as the nation of Denmark. The refining of the tar-like bitumen requires more water and uses almost twice as much energy as the production of conventional oil. Particularly visible in winter, vast plumes of toxic pollution fill the skies. The oil sands are so large they create their own weather systems.
Boreal Forest and Wetland | Athabasca Delta Northern Alberta | 2010
Located just 70 miles downstream from the Alberta oil sands, the Athabasca Delta is the world's largest freshwater delta. It lies at the convergence of North America's four major flyways and is a critical stopover for migrating waterfowl and considered one of the most globally significant wetlands. It is threatened both by the massive water consumption of the tar sands and its toxic tailings ponds.
Tar Pit #3
This network of roads reminded me of a claw or tentacles. It represents for me the way in which the tentacles of the tar sands reach out and wreak havoc and destruction. Proposed pipelines to American Midwest, Mackenzie Valley, and through the Great Bear Rainforest will bring new threats to these regions while the pipelines fuel new markets and ensure the proposed five fold expansion of the oil sands.