United States on a Path Towards Energy Independence?

Is North Dakota the key to America’s energy independence? It just might be. On Monday, as part of its Annual Energy Outlook 2012 (AEO2012) Early Release, the Energy Information Administrationprojected that US oil production will increase to 6.7 million barrels per day in 2020, an increase of 20% over the next decade and 11% higher than EIA’s earlier prediction  As The Wall Street Journal reported, the forecast includes new production data from “developing oil fields, including the Bakken shale area in North Dakota, which could hold as much as 4.3 billion barrels of recoverable oil.”

Earlier this month Bloomberg reported that North Dakota oil production surged 42% to 510,000 barrels a day in November from a year earlier as energy explorers accelerated drilling the Bakken Shale formation of the Williston Basin which underlies much of North Dakota, eastern Montana, and parts of southern Canada. Although oil was first discovered there over 60 years ago, efforts to produce it have noticeably increased in the past few years, due in large part to technological advancements in production technology.

So what does this mean in terms of US Energy consumption? MSNBC reported in December that, “it’s highly likely that this year will be the first time in more than six decades that the United States will be a net exporter of petroleum products.” EIAprovided some more statistics in its executive summary of AEO2012 Early Release: “Net petroleum imports as a share of total U.S. liquid fuels consumed drop from 49 percent in 2010 to 36 percent in 2035 in AEO2012.” (See EIA Chart).

Edward Morse, a former US energy official who now directs global commodities research at Citigroup says of the shift: “It’s dramatic. It’s transformative,” and Daniel Yergin stated, “What’s occurring is a rebalancing of the world oil supply.”

In addition to the implications for the oil market, the boom is having effects on the life and state economy in North Dakota. We like the following articles that further describe the change of pace to the small towns. This Forbes article provides more insight into the “Bakken Boom,” while NPR describes some of the downsides.