Congress is continuing to give increasing attention to the changing energy landscape.
This morning at 10 a.m., the House Energy and Commerce Committee will hold a hearing on “American Energy Security and Innovation: An Assessment of North America’s Energy Resources.” Check out the complete witness list here.
Adam Sieminski, administrator of the U.S. Energy Information Administration, is among those expected to testify. In his prepared statement, Mr. Sieminski sizes up the recent boom in U.S. crude oil production, which he notes is driven largely by production of unconventional shale resources:
EIA estimates that U.S. total crude oil production (which includes lease condensates) averaged 6.4 million barrels per day (bbl/d) in 2012, an increase of 0.8 million bbl/d from the previous year driven largely by growth in tight oil production (Figures 1 and 2). This increase in U.S. annual production is the largest since Colonel Drake drilled the first crude oil well in Pennsylvania in 1859. EIA forecasts that another record increase in production will occur this year, with domestic crude oil production expected to increase to 7.3 million bbl/d in 2013. The 7.9 million bbl/d EIA currently forecasts for 2014 would mark the highest annual average level of production since 1988. Central to this projected growth will be ongoing development activity in key onshore basins. Drilling in tight oil plays in the Williston Basin’s Bakken formation in North Dakota and Montana, the Western Gulf Basin’s Eagle Ford formation, and the Permian Basin in Texas is expected to account for the bulk of forecast production growth over the next two years.
Acclaimed energy expert Daniel Yergin will also appear before the committee. In his prepared testimony, Yergin addresses the geopolitical implications of the changing energy landscape, noting that this issue has become prominent in international circles:
This question has moved to the front of international discussion. Last Friday, at the venerable Munich Security Conference, a forum for leading defense and security officials from around the world, this was one of the main topics of discussion. This kind of question was never on that agenda before.
One immediate impact has already been cited. Tighter sanctions on Iran have succeeded in taking half of Iran’s oil exports out of the market, even as global demand for oil continues to expand. The increase in Saudi output was part of the formula. But also of great importance has been the growth in U.S. supply –at a rate higher than generally anticipated.
Certainly expanded domestic supply will add to resilience to shocks and add to the security cushion. Moreover, prudent expansion of U.S. energy exports will add an additional dimension to U.S. influence in the world. However, there will remain only one global oil market, and a major disruption anywhere would affect the entire market. The question as to how the unconventional revolution will affect U.S. involvement in the Middle East is moving to the fore. Current net U.S. imports from the Persian Gulf are equivalent to eight percent of total consumption, as it is. Even if that number goes down, the nature of U.S. interests in the region go well beyond direct oil imports to the importance of the region for the global economy and global security.
Check back on the blog for updates later in the day.