The U.S. has become one of the three major oil actors in the global market, Daniel Yergin, a leading U.S. oil analyst, said on Tuesday.
"Now, instead of OPEC and non-OPEC, you have the big-three -- Saudi Arabia, Russia, and a country called the United States," Yergin said during the Wall Street Journal CFO (Chief Executive Officers) Network annual meeting held in Washington, D.C.
For decades OPEC countries controlled the amount of oil supply in the global oil market while non-OPEC nations, such as Russia and Brazil, have also become major players in the market.
After the shale revolution in 2008, the U.S. began to gradually increase domestic oil production.
"We had this increase in U.S. production that was greater than the production of every single OPEC country, except Saudi Arabia. So it happened really fast," said Yergin, who won the Pulitzer Prize in 1992 for his best-selling book, The Prize: the Epic Quest for Oil, Money, and Power.
U.S. crude production rose from 5 million barrels per day (mbpd) in 2008 to 9.4 mbpd in 2015, marking a whopping 88 percent jump, according to the U.S.' Energy Information administration (EIA) data.
The U.S., in addition, has surpassed Saudi Arabia to become the top oil producer in the world for three years in a row, according to British Petroleum's (BP) Statistical Review of World Energy 2017 report.
- "Shale 2.0"
The technologies behind the shale revolution, such as hydraulic fracturing and horizontal drilling, are still developing, according to Yergin.
"It is still a relatively new technology ... We are in inning 3 or inning 4," Yergin said, using metaphors from baseball, in which a regular game consists of nine innings.
"I think we are now in shale 2.0 where people have really reengineered and done reprocesses, found out how to be more efficient, and they are helped by the fact that costs are much lower," he explained.
The expert emphasized that the U.S. shale industry has also succeeded in attracting foreign investment.
"People talk about the Permian basin in Texas, and New Mexico ... You see this huge amount of investment, which used to go overseas and to other places, but is now going into this concentrated area in the United States," he said.
Yergin stressed that the position of the U.S. in the global energy market has also started to shift.
"It has changed the position [of the U.S.]. You go to Asia, Europe, and the Middle East, they realize the position of the U.S. in the world is different today because of this change in our energy position," he said.
- "U.S. to be in top-3 in LNG"
The expert also highlighted the rising shale gas production in the U.S. and the country's role in the global LNG market.
"The first shipment of U.S. LNG went through the Panama Canal and arrived in China near Shanghai last January. Here, now we have China buying natural gas from us," he said.
Yergin argued that LNG from the U.S. will also create more alternative gas resources for western Europe, which is currently highly dependent on Russian natural gas.
The U.S.' LNG exports increased from 0.7 billion cubic meters (bcm) in 2015 to 4.4 bcm in 2016, according to BP's report.
LNG imports and exports grew by 6.2 percent last year, from the year before, the report showed.
"The U.S. is also going to be one of the big-three LNG exporters in the world as well," Yergin said.
- Paris Climate Agreement
Despite President Donald Trump's withdrawal of the U.S. from the historic Paris Climate Agreement, Yergin said renewable energy still has high potential for growth.
"This was a unique thing bringing all these countries together," he said referring to the 195 nations that signed the accord to lower emissions, but added "Much more important than the Paris Accord is the tax incentives and subsidies that were put in place in December 2015."
In December, multi-year extensions of solar and wind tax credits, plus one-year extensions for a range of other renewable energy technologies were passed in the U.S. House and Senate.
Yergin, who is also vice chairman of consultancy group IHS Markit Inc., disclosed that their own research indicates that two-thirds of the new electric generating capacity to be built in the U.S. will come from renewable sources, because of subsidies and incentives.
"That's going to continue to march forward. The cost of solar continues to come down. It's the innovation and the investment that counts," he concluded.
By Ovunc Kutlu in New York
(Anadolu Agency, June 15, 2017)
