By TOM FOWLER WSJ.COM 12/11/12
North America will become a net energy exporter by 2025, thanks to a surge in oil and gas production and rapid improvements in energy efficiency, Exxon Mobil Corp. predicts in its latest long-term energy outlook.
The closely watched annual forecast of energy trends, set to be released Tuesday, concludes the growth of U.S. and Canadian oil and gas production has staying power and could lead to more international shipments of oil and gas, said Bill Colton, Exxon's vice president of corporate strategic planning, who led the study.
Exxon's forecast follows similar estimates by the U.S. Energy Information Administration and the International Energy Agency, which have recently predicted North America will produce more energy than it uses in just a few decades, a shift with geopolitical as well as economic ramifications.
Exxon predicts that an anticipated decline in coal usage by power plants will accelerate as more efficient natural-gas-fired plants are built. The Irving, Texas, company forecasts coal use will drop 33% from 2010 to 2025,substantially more than its previous 23% estimate.
"The economics of natural gas in the power-generating sector continue to look even better over time," Mr. Colton said.
The U.S. is in the midst of a renaissance of oil and gas production thanks to a combination of technologies, including hydraulic fracturing and horizontal drilling, which are unlocking deposits trapped in shale formations throughout the country.
Daily U.S. oil production reached a 15-year high in September, according to the EIA, and is expected to keep climbing. U.S. natural-gas production will outpace the nation's demand by 2020, the EIA said last week.
Growing production from Canada's oil-sands region, much of it exported to the U.S., and the continued growth of deep-water Gulf of Mexico production is also bolstering forecasts.
The net energy exports forecast for North America by Exxon don't mean the U.S. would be energy independent, however, as it will still rely heavily on Canadian crude production, Mr. Colton said.
Global energy demand will increase 35% from 2010 to 2040, with most of the increased demand coming from developing nations like India and China, the Exxon report says.
Developed regions like the U.S., Canada and Europe will see their demand flat or declining as they become more efficient, the company said. By 2040 developed nations are expected to generate 80% more economic output than in 2010 but use the same amount of energy, Mr. Colton said.