Increase of Shale Oil Production Impacting North America
As the domestic shale oil boom continues, the U.S. is edging closer to declaring energy independence. Energy companies are surging forward to capitalize on the global demand for crude, but not without logistical complications.
The domestic and global demand for crude oil produced from fracturing shale has exposed a lack of transportation and refining infrastructure in North America. With pipelines and railroads running at capacity, major shale plays such as Utica in Ohio are at times forced to halt operations because transportation cannot keep pace with production. Additionally, some U.S. refineries are unable to process the lighter, sweeter crude produced from shale plays as opposed to the traditional heavier crude for which they were built.
Despite these setbacks, the U. S. has a surplus of oil production. The exponential increase in domestic oil production has resulted in lower energy costs at home. Reduced energy prices are driven primarily by new shale extraction technologies, which result in drilling efficiencies and increased precision in North American operations.
Trends show that overseas shale plays are slower to develop their own resources, while American exports of refined products have increased 60% since 2010. The drastic increase in demand has lawmakers in Washington calling for the lift of the 1970s oil export ban to meet the energy demands of the global market. The U.S. currently exports coal and natural gas; however, lifting the forty-year-old ban would allow crude oil to be exported with significantly decreased legal restrictions.
The development of horizontal drilling has positioned the United States to become the world’s largest oil and gas producer this year. Re-industrialization of the oil and gas industry is at hand while companies scramble to expand their shale play holdings, pipeline and rail transporting capabilities and refining potential. If the U.S. can improve infrastructure at home and eliminate regulatory obstacles to exporting oil produced from shale, it will be poised to dominate the global energy market.