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U.S. Will Be Energy Self-Sufficient by 2035 on Shale, BP Says

The U.S. will be able to provide for all its own energy needs by 2035 as output of shale oil and gas accelerates and demand growth slows, BP Plc (BP/) said.

The country, which became the world’s biggest producer of liquid energy last year, will produce more gas and coal than it consumes, BP said in its Energy Outlook 2035 report today.

The report highlights how technology to exploit shale resources by grinding underground rocks to release oil and gas will transform the global energy trade over the next two decades. Asia and Europe will become the main importers of fuel while the rest of the world exports, and the Organization of Petroleum Exporting Countries will have to rein in output to prevent prices from falling.

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“Both oil and gas import concentration will increase massively in Asia and Europe,” BP Chief Economist Christof Ruehl said on a conference call. “About 80 percent of all traded oil will go into Asia.”

World energy demand will rise by 41 percent by 2035 from 2012, a slower pace than the 52 percent gain in the last two decades, BP said in the report. Ninety-five percent of demand growth will come from emerging economies, defined as those not in the Organisation for Economic Cooperation and Development, and more than half the increase will come from China and India.

OPEC Capacity

Spare production capacity from OPEC is forecast to surge to 6 million barrels a day by about 2018 as the group cuts output to offset rising global supplies, Ruehl said. That’s the highest since the 1980s. The group’s unused capacity was at 3.37 million barrels a day in November, according to the International Energy Agency.

Unrest and supply cuts within OPEC nations are likely to persist, Ruehl said.

“These things can last much longer than expected,” he said. “The economic situation in OPEC countries will come under increasing strain. That, of course, sows the seeds for the kind of unrest which leads to supply disruptions which we have seen over the last three years.”

The shale revolution will make the U.S. a net exporter of gas in 2017, according to the report. Other countries may still be slow to harness shale resources, with North America still accounting for 65 percent of global tight oil and about 70 percent of global shale gas production in 2035. North America will provide 99 percent of the world’s shale gas through 2016.

Output Progress

Energy production will be able to keep up with demand, BP predicted. Fossil fuels will remain dominant sources, with oil, gas and coal each accounting for about 27 percent of global demand by 2035, the first time that there isn’t a single dominant fuel in the energy mix.

China will become the largest energy importer by 2035 as import dependence rises to 20 percent from 15 percent. The country will overtake the U.S. as the world’s biggest oil consumer by 2027 and surpass Russia as the largest gas consumer after the U.S. by 2025, the report said.

Emissions of carbon dioxide, the polluting greenhouse gas, will rise by 29 percent by 2035, with all of the growth coming from countries outside the OECD. Global emissions in 2035 will be almost double the 1990 level even though emissions from OECD countries will decline, BP forecast.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net; Stephen Voss at sev@bloomberg.net

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