Oil and Gas Boom Could Make U.S. the World's Biggest Producer

'Some of the numbers are eye-popping,' Daniel Sullivan, commissioner in Alaska's Department of Natural Resources, told a panel of experts at the International Economic Forum of the Americas in Montreal.

The United States is seeing a dramatic surge in oil and gas production and could overtake the world's biggest producers -- Russia and Saudi Arabia -- in another decade, a U.S. official said Tuesday.

"Some of the numbers are eye-popping," Daniel Sullivan, commissioner in Alaska's Department of Natural Resources, told a panel of experts at the International Economic Forum of the Americas in Montreal.

In the last quarter, the United States produced 6 million barrels of conventional and unconventional oil a day, he said, adding: "We haven't done that in 15 years."

Since 2008, the United States has added 1.6 million barrels of additional oil, and in 2011, it registered the largest increase in oil production of any country outside of OPEC, he told hundreds of participants.

These figures compare with a daily output in March of about 9.923 million barrels a day by Saudi Arabia -- the largest producer of the OPEC nations -- and 9.920 million by Russia, according to the industry data compiler Joint Organizations Data Initiative.

Sullivan said the respected consultancy PFC Energy estimates that by 2020, "the U.S. could be the largest hydrocarbon producer -- that's oil and gas -- in the world, overtaking Russia and Saudi Arabia."

In Alaska alone, the potential off the coast is viewed as the largest of any country, about 40 billion barrels in conventional oil, according to the U.S. Geological Survey.

A Boon for U.S. Energy Security

President Obama has indicated that offshore oil resources could help mitigate global disruptions in supply, and his administration has tried to craft an energy strategy that balances business interests with environmental concerns, especially in the Arctic.

In November, the Obama administration proposed a new plan for offshore oil and gas leases in the Gulf of Mexico and off the coast of Alaska, including the environmentally sensitive Arctic.

But it did not open up for exploration the politically sensitive Atlantic or Pacific coastlines, or the eastern Gulf of Mexico along the Florida coast.

Unless it faces a last-minute challenge, Royal Dutch Shell PLC (IW 1000/2) is expected to begin drilling test wells off northern Alaska in July, opening up new possibilities for oil exploration in a previously untapped, pristine environment.

Sullivan argued that the benefits of the shift in energy security could be substantial, especially in terms of growth and jobs for a country where half the U.S. trade deficit is due to imports of oil.

He said in 2010-2011, there were 600,000 jobs created in the shale oil and gas industry.

But addressing the same audience, the chairman of the World Energy Council drew a more somber global picture.

Pierre Gadonneix said the economic crisis meant energy demands have slowed down, even though they were starting to grow again, and that oil prices remain high.

"Future growth is threatened by the prospect of climate change and the drain on our natural resources," he said, adding that the main challenges would be to improve the security of energy supply, to improve competitiveness and to struggle against "energy poverty."

"We must recall that more than 1.3 billion people still do not have access to electricity in developing and developed countries," he said.

Pointing to "big accidents," chiefly in the Gulf of Mexico, where a BP oil spill in 2010 unleashed 5 million barrels of oil into the seas, Gadonneix urged plant operators and governments to agree on global standards for operations.

Countries struggling to become economically efficient and feed global demand for energy increases also spoke at the forum.

Iraq Vice President Khudier Mosa Jafer Alkhuzaie said the country's "oil industry was the engine for the entire economy."

Iraq has huge reserves of oil -- more than 103 billion barrels -- along with large reserves of natural gas.

"We expect investments in this area will help us develop the oil industry in Iraq," he said, pointing to a fiscal law adopted in 2006 that lowers obligations imposed on foreign companies and "facilitates the liberty of movement for foreigners and their capital."

Copyright Agence France-Presse, 2012

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