A huge turnaround this year for the oil industry as fracking has upended the biggest world players.
America has now replaced Saudi Arabia as the world’s biggest producer and is fast pushing the North Sea operators out of the market. Increased shale oil production in the US and a decrease in global demand have caused oil prices to plummet from $115 a barrel last summer to around $65 now.
As a result, two-thirds of North Sea operators have been forced to cancel projects in the region, while half have reduced staff training, with the combination of rising production and falling demand expected to have severe repercussions for the North Sea in the coming years.
Demand for fossil fuels dropped dramatically this year especially in China combined with an increased global emphasis on tackling climate change.
Spencer Dale, BP’s group chief economist, said:
“We are truly witnessing a changing of the guard of global energy suppliers. The implications of the shale revolution for the US are profound.”
The US even overtook Russia as the world’s largest producer of oil and gas combined last year, as a result of the shale revolution.
Good news for those concerned about our dependence on the Russian market with regard to the current political climate.
It’s no wonder the Brits have been inspired to start fracking themselves having seen the positive economic effects the method has produced for the US.
It may well be the future as the oil industry in the North Sea is struggling, with much of the easily accessible reserves having been extracted already and the remainder expected to be relatively expensive to recover.
Experts have forecast that tens of thousands of jobs could be lost in the North Sea with majors such as BP, Shell and France’s Total among those laying off staff, reducing investment or closing operations.
Bad news for these players but there’s a silver lining. Emissions from fossil fuels have shown the slowest annual growth in 15 years and renewable energy is becoming more prevalent.
It seems the Americans have changed the face of oil production and ironically, these gas guzzlers have inadvertently provided a more environmentally friendly solution to global demand.