The Paris-based International Energy Agency (IEA) released its annual World Energy Outlook report this week, projecting an “all but self-sufficient” North America that will surpass Saudi Arabia as reigning energy producer within the next two years. In its press release, IEA notes that “Natural gas in the United States currently trades at one-third of import prices to Europe and one-fifth of those to Japan. Average Japanese or European industrial consumers pay more than twice as much for electricity as their counterparts in the United States, and even China’s industry pays almost double the US level.”

And in its monthly drilling productivity report, the U.S. Energy Information Agency (EIA) announced yesterday that Marcellus Shale production is increasing yet again, nearing 13 billion cubic feet per day. By all measures, the Times Are Changing for American Energy.

The Financial Times reports this yesterday under the headline “Shale Gas Boom to Fuel U.S. Lead over Europe and Asia for Decades”:

  • The shale gas boom will boost US manufacturing and jobs until at least 2035, the world’s most respected energy body predicted yesterday, reinforcing America’s economic edge over Asia and Europe for the next two decades. The International Energy Agency said that shale would continue to fuel the American economy even after the US starts ramping up exports. … Foreign companies in energy intensive industries have been investing heavily in US-based plants to take advantage of cheap energy costs. … Vallourec, a French iron and steel company, recently invested more than $1bn in a new plant in Ohio, while Sasol, the South African oil company, plans to invest more than $20bn in US petrochemical plants. “We will see manufacturing industry in the US flourish. US companies will enjoy a competitive advantage and increase their market share in terms of exports,” said Fatih Birol, chief economist at the IEA. By 2035 the IEA expects Japanese and European gas and electricity prices to be twice as high as in the US.

Here are key findings from the report’s fact sheet and executive summary:

  • Improved energy efficiency and a boom in unconventional oil and gas production help the United States to move steadily towards meeting almost all of its energy needs from domestic resources by 2035.
  • Energy costs are greatest in the chemicals industry, where they can represent around 80% of total production costs. Lower gas and electricity prices in 2012 in the United States relative to Europe equated to estimated savings of close to $130 billion for the entire US manufacturing industry. … The contrast between the United States and other large importers is striking: annual energy import bills in the United States have fallen by 40% since 2008, while they have increased slightly in the European Union and continued to climb in many other regions.
  • Energy price variations are set to affect industrial competitiveness, influencing investment decisions and company strategies. … The United States sees a slight increase in its share of global exports of energy-intensive goods, providing the clearest indication of the link between relatively low energy prices and the industrial outlook.
  • The net North American requirement for crude imports all but disappears by 2035 and the region becomes a larger exporter of oil products.
  • North America continues to benefit from ample production of unconventional gas, with a small but significant share of this gas finding its way to other markets as LNG, contributing – alongside other conventional and unconventional developments in East Africa, China, Australia and elsewhere – to more diversity in global gas supply.

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