BP chief economist Christof Ruehl, who was among the first to begin highlighting the prospects for North American energy independence, is now forecasting that the rise of unconventional oil and gas production could emerge as a ‘force for good’ in dealing with prevailing global economic imbalances.

In an interview with Engineering News Online during a recent visit to South Africa, Ruehl said the current debate centres on the relative competitiveness that has flowed to the US from unconventional oil and gas, particularly when compared with Europe. However, he believes the balance-of-payments effects will eventually dwarf that discussion.

Despite a decline in US energy imports, which fell by a further 930 000 bbl/d last year and were now 36% below their 2005 peak, those imports still accounted for about half of the US’s trade deficit. “So to the extent that the US becomes energy self-sufficient this will decline further,” Ruehl outlined.

By contrast, Chinese imports were rising rapidly, with net oil imports growing by 610 000 bbl/d in 2012 and accounting for 86% of the global increase.

These opposing trends could help cut America’s deficit and eventually affect China’s surplus, which, in turn, could dampen concerns about China’s long-term willingness to finance the US’s sizable trade deficit.

“All of a sudden, the energy market could emerge as a force for good with regards to a balancing of the global imbalances,” he argues. Similar balance-of-payment imperatives could also shape the decision-making processes of other countries as they weigh up whether or not to exploit their shale-gas resources.

Separately, the International Energy Agency has indicated that the US could become a net exporter of natural gas by 2020 and become energy independent by 2035.

In 2012, the US recorded the largest oil and natural gas production increases in the world and reported the largest gain in oil production in its history.

BP’s Statistical Review of World Energy 2013 showed that US output rose by one-million barrels a day, while the country’s gas production rose by 4.7%, the largest volumetric increase anywhere in the world.

BP believes that, by 2030, about 9% of global oil supply will be from tight oil and will still be dominated by North America, while 16% of global gas supply will be from shale resources.

However, Ruehl stresses that this forecast is highly sensitive to political decisions that will be taken across shale-rich jurisdictions about whether and how such resources should be exploited.

The immediate implication of the rise of North America’s unconventional oil and gas production has been that the US has substituted coal for gas, while Europe has replaced expensive gas with coal, while that gas has found markets in Asia.

In addition, the Organisation for Petroleum Exporting Countries (Opec) has to cut oil production to neutralise the effect of these new resources. “But it will be a tall order for Opec to remain cohesive, as it will drive spare capacity to about 6-million barrel a day, which is the highest since the 1980s.”

The geopolitical implications of the eastwards shift in energy trade routes remains uncertain, but the possible consequences of these changing parameters could be significant, Ruehl argued.

It was also possible that unconventional gas could have a major impact on the environmental debate, particularly given that coal has emissions about twice that of gas and replacing even a small portion of coal with gas could result in major emission reductions.

“So the question is: will the fear of fracking dominate the environmental debate, or will there be support for more gas in international trade to replace coal?”