1. Executive summary

Overview

Since the 2014 International Energy Agency (IEA) review of United States (US) energy policies, the shale revolution has continued to be a driving force for US energy policy, shifting gears from a mindset of energy scarcity to one of energy abundance. Further innovation in oil and gas extraction through additional refinements in horizontal drilling coupled with hydraulic fracturing has made oil and gas production a mainstay of the US energy landscape and, indeed, the world. Domestic oil production1 in the United States was 15.5 million barrels per day in 2018, a remarkable 124% increase from 2008, led by light tight oil production from shale formations. Meanwhile, indigenous natural gas production experienced a remarkable 40% growth to 760.4 billion cubic metres over the same time frame.

Notably, the shale revolution is expected to turn the United States from a net energy importer to a net exporter by 2020 as production growth of crude oil, natural gas and natural gas liquids exceeds consumption. As the United States is poised for further production growth over the coming decade, facilitating the buildout of supporting infrastructure will be a key factor to maximise the benefits of shale, both at home and abroad.

Moreover, the abundance of low-cost natural gas has resulted in gas-fired generation overtaking coal-fired generation in the power sector. Added to this, falling costs and policy support for renewable power have motivated a surge in wind and solar generation capacity. Combined with the growth in natural gas generation, both coal and nuclear – previous cornerstones of US electricity markets – are facing closures. Policy and regulatory responses will be needed to ensure a smooth transition in the electricity sector that accommodates the growth in variable renewables while also ensuring reliability and resilience of the overall power system.

Energy security remains a priority issue for the United States. The country continues to demonstrate a strong focus on reliability and resilience, recognising that its national and economic security depend on the reliable functioning of its energy infrastructure. The government has taken steps to update its security frameworks, including by introducing processes to address new trends such as cyberthreats. US energy exports are already playing an important role in diversifying global energy supplies and mitigating the potential impact of disruption events. In this regard, continued careful consideration is required when examining proposals to modernise and sell down its Strategic Petroleum Reserve, given its critical role in a future IEA collective response.

1 Includes conventional oil, light tight oil, condensates, natural gas liquids and non-conventional oil.

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ENERGY INSIGHTS

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