“Fears over oil running out – to which BP has never subscribed – appear increasingly groundless,” BP’s group chief executive Bob Dudley said. “The U.S. will not be increasingly dependent on energy imports, with energy set to reinvigorate its economy.”
Aided by gains in technology, the U.S. shale gas boom has already cut household energy bills by an estimated U.S. $1,000 a year and spurred a wave of industrial investment, reversing a 30-year trend of declining manufacturing jobs.
According to Bloomberg News, at least five new U.S. steel plants are planned that would use gas instead of coal to purify iron ore, including a U.S. $750 million Louisiana plant by Nucor Corp.
Chemical and fertilizer companies are also reportedly planning new gas-fueled plants, with some analysts saying cheap energy could result in a “re-industrialization” of the United States.
While major shale gas and tight oil resources exist elsewhere, including in Australia, BP’s report noted that significant exploitation had thus far only occurred in North America, due to a range of market factors.
In a statement, BP group chief economist Christof Rühl said: “Vast unconventional reserves have been unlocked in the U.S., with oil production following gas. This delivery has been made possible not only by the resources and technology, but also by ‘above-ground’ factors such as a strong and competitive service sector, land access facilitated by private ownership, liquid markets and favorable regulatory terms.
“No other country outside the U.S. and Canada has yet succeeded in combining these factors to support production growth. While we expect other regions will adapt over time to develop their resources, by 2030 we expect North America still to dominate production of these resources.”
Fossil fuels dominant
President Obama’s call in his second inaugural address for action on climate change has also received assistance from the gas boom.
In the United States, according to the Environmental Protection Agency (EPA), natural gas-fired power plants produce around half as much carbon oxide emissions, less than a third as much nitrogen oxides, and one percent as much sulfur oxide as coal-fired plants. In light of this, the New York Times reports that the EPA is planning tighter emission standards to force power generators to switch from coal to gas.
The National Resources Defense Council estimates that emissions from current coal-fired plants could be cut by more than 25 percent by the end of this decade, helping the U.S. president achieve a pledge of reducing total domestic emissions by about 17 percent from 2005 levels by 2020.
Yet the oil and gas boom will see fossil fuels remain dominant in the U.S. energy mix, with renewable energy’s share of total electricity generation forecast to rise from 13 percent in 2011 to just 16 percent in 2040, according to the EIA.