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OTTAWA — The U.S. oil boom will vault the country into first place among crude producers within two years, the International Energy Agency says, which will pose a stiff challenge for the Canadian energy industry as it faces rapidly declining American demand for imported oil.
“On the back of light, tight oil output, the United States is on the verge of becoming the world’s largest oil producer, and is well on its way of realizing the American dream of net energy self-sufficiency,” the Paris-based IEA said in its annual energy forecast, released Tuesday.
The IEA said oil prices would continue to rise and spur development of unconventional resources such as U.S. tight oil plays, the oil sands in Canada and deep-water production in Brazil. Oil prices are expected to climb steadily to $128 (U.S) a barrel in 2012 terms by 2035, said the IEA, which advises developed countries on energy issues.
But the combination of soaring production and falling demand in the U.S. underscores the need for Canadian oil producers to expand exports beyond traditional markets in the United States and find new international markets, especially in the fast-growing Asia-Pacific region. To make that happen, Canadian energy companies must win approval for at least some of the several pipeline proposals that would move crude to the West Coast, the East Coast and the U.S. Gulf Coast, destinations that would allow for global export to high-demand regions.
Those include China and India, which are expected to lead the increase in international oil demand along with the Middle East, as the developing world more than makes up for declining consumption in North America, Europe and Japan.
By 2015, the U.S. is expected to overtake Russia and Saudi Arabia in oil production, with output growing from 9.2 million barrels per day last year to 11.6 million in 2020. But as fields such as the Bakken in North Dakota and the Permian in West Texas age, U.S. crude production would plateau after 2020 and then begin a slow decline after 2025, the IEA said. Still, U.S. oil demand is forecast to fall more quickly than production declines between 2025 and 2035.
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