Thursday, March 22, 2012

More on Domestic Energy Boom and New Industrial Revolution as N. America Becomes New Middle East



Larry Kudlow interviewed Ed Morse last night on The Kudlow Report, watch the segment above, where Citigroup's head of global commodities says the United States is on the verge of a new industrial revolution as the result of a domestic energy boom. 

“There’s no doubt that we’re seeing an industrial revolution — a reindustrialization of the United States — taking place because of the shale revolution taking place lowest, because we have the lowest natural gas prices in the world,” Ed Morse told Larry Kudlow. “We will for one or two or three generations.” 

In a WSJ editorial yesterday titled "Move Over OPEC, Here We Come," Ed Morse wrote that North America already has become the most important marginal source of oil and gas globally, and is quickly becoming the new Middle East for energy production:

"The United States has become the fastest-growing oil and gas producer in the world, and it is likely to remain so for the rest of this decade and into the 2020s. Add to this output the steadily growing Canadian production and a likely reversal of Mexico's recent production decline, and theoretically total oil production from the three countries could rise by 11.2 million barrels per day by 2020, or to 26.6 million barrels per day from around 15.4 million per day at the end of 2011.

 On top of this, the U.S. and Canada could see natural gas output rise by 22 billion cubic feet per day by 2020, with 14 billion of it coming from the Lower 48 states, four billion from Alaska and four billion from Canada. That's an increase of one-third, catapulting this continent into the ranks of significant exporters of liquefied natural gas.

We estimate that as many as 3.6 million new jobs may be created on net by 2020. Some 600,000 jobs would be in the oil and gas extraction sector, another 1.1 million jobs in related industrial and manufacturing activity, and the remainder in ancillary job sectors. Overall, the national unemployment rate could decline by as much as 1.1 percentage points from what it otherwise would be in 2020."

8 Comments:

At 3/22/2012 10:57 AM, Blogger Buddy R Pacifico said...

"The United States has become the fastest-growing oil and gas producer in the world, and it is likely to remain so for the rest of this decade and into the 2020s"

Interesting that even the top analysts, don't include Natural Gas Liquids (NGL in their presentations.

Where is the biggest energy company in the world putting their U.S. drilling investment?

From the Exxon Mobil 3-8-12 Analyst Meeting Transcript:

Andy Swiger
" We have been actively shifting more of the drilling into that liquids-rich portfolio, and as I noted, acquiring more of it at the same time. So you're going to see
full-time a continued shifting into that."

and

"Now, what I would say is if I thought about it instead of proportion of capital in terms of
the total corporation on a mix of drilling we're crossing the threshold of more than 50%
going into liquids-rich now as I speak and moving on and upward
."

So, XOM is not necessarily drilling oil or gas wells. What they are drilling are NGL wells. This fits their integrated model, of upstream wells feeding their giant downstream manufacturing of lubricants and chemicals.

 
At 3/22/2012 12:24 PM, Blogger Larry G said...

will natural gas become a replacement for vehicle fuel?

or will it just be primarily used for heat and electricity generation?

also -

does the US have MORE RESERVES of oil compared to other countries in South America, Africa, Asia, etc OR are we just more intensively developing it?

If the other countries developed as intensively as we are - would they also find much more oil and gas?

 
At 3/22/2012 2:17 PM, Blogger N. Watson said...

@Larry G. There was an article in last Sunday's Columbus (OH) dispatch which talked about the Natural gas version of the Honda Civic vs. the 4 cyl gasoline Honda Civic.

Basically, right now, the incremental cost of the NG engine plus the cost of the in home fueling station equates to a 116,000 mile breakeven point.

The costs for NG vehicle engines are going to have to get much cheaper as are the distribution netwoks to make this a big deal.

If Gas stays inexpensive enough....It could easily happen.

I also think the bigger penetration could come from the trucking fleet and companies like UPS and Federal Express.

 
At 3/22/2012 4:40 PM, Blogger Larry G said...

I believe that LPG (propane) is derived from NG.

LPG is about twice as energy dense as NG and as such would allow the use of smaller tanks (or larger tanks for longer range)..

so far...I've not see the price of propane come down...

 
At 3/22/2012 6:24 PM, Blogger juandos said...

Amazing how Rep. Welch doesn't look the least bit embarrassed whining about 'those evilllllll' speculators...

So if the speculators drive prices up, don't they also drive them down?

From Zer0 Hedge: WTI Drops Most In 3 Months

From the IER: Blaming speculators for rising oil prices is like blaming thermometers for a heat wave...

 
At 3/23/2012 12:50 AM, Blogger Mkelley said...

Imagine what we could do if the Obama administration was not doing all it could to prevent energy production:

http://news.investors.com/article/605348/201203221853/epa-partly-to-blame-for-gas-crisis.htm?src=SeeAlso

http://naturalresources.house.gov/Issues/Issue/?IssueID=15410

 
At 3/23/2012 6:50 PM, Blogger Ron H. said...

juandos: "Amazing how Rep. Welch doesn't look the least bit embarrassed whining about 'those evilllllll' speculators."

I thought you knew. No one has ever found a way to embarrass a politician.

"So if the speculators drive prices up, don't they also drive them down?"

Hmm. Seems logical to me, but then I'm not a politician, so what do I know?

 
At 3/25/2012 12:27 PM, Blogger juandos said...

"Hmm. Seems logical to me, but then I'm not a politician, so what do I know?"...

Well ron h maybe what the problem is is what we're being exposed to that's being foisted off as science...

Consider the following: Psychology, Pseudo science and left wing politics

We're not part of the choir so we don't understand...

 

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