Forget all those speeches about energy independence, says Daniel Yergin.The world’s global oil map is already being redrawn — not by politicians, but by technology.
For more than five decades, the world’s oil map has centered on the Middle East. No matter what new energy resources were discovered and developed elsewhere, virtually all forecasts indicated that U.S. reliance on Mideast oil supplies was destined to grow. This seemingly irreversible reality has shaped not only U.S. energy policy and economic policy, but also geopolitics and the entire global economy.
But today, what appeared irreversible is being reversed. The outline of a new world oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere. The new energy axis runs from Alberta, Canada, down through North Dakota and South Texas, past a major new discovery off the coast of French Guyana to huge offshore oil deposits found near Brazil.
This shift carries great significance for the supply and the politics of world oil. And, for all the debates and speeches about energy independence throughout the years, the transformation is happening not as part of some grand design or major policy effort, but almost accidentally. This shift was not planned — it is a product of a series of unrelated initiatives and technological breakthroughs that, together, are taking on a decidedly hemispheric cast.
The search for a “hemispheric energy policy” for the United States has been a subject of discussion ever since the oil crises and supply disruptions of the 1970s. Yet it was never easy to pin down exactly what such a policy would mean. Some years ago, an economic adviser to a presidential candidate dropped in to see me, explaining the directive that his boss had given him: “You know that Western hemispheric energy policy that I have been giving speeches about? Could you talk to some people around the country and find out what I actually mean by a Western hemispheric energy policy?”
The notion of “hemispheric energy” in the 1970s and 1980s rested on two pillars. One was Venezuela, which had been a reliable petroleum exporter since World War II. The other was Mexico, caught up in a great oil boom that had transformed the United States’ southern neighbor from an oil importer into a major exporter.
But since Hugo Chavez took power in Venezuela, its petroleum output has fallen — about 25 percent since 2000. Moreover, Venezuela does not seem quite the pillar to rely on when its leader denounces “the U.S. empire” as “the biggest menace on our planet” and aligns his country with Iran. And Mexico, which depends on oil for 35 percent of its government revenue, is struggling with declining output. Without reform to its oil sector and international investment, it could become an importer of oil later this decade.
The new hemispheric outlook is based on resources that were not seriously in play until recent years — all of them made possible by technological breakthroughs and advances. They are “oil sands” in Canada, “pre-salt” deposits in Brazil and “tight oil” in the United States.
In little more than a decade, Canada’s oil sands have gone from being a fringe resource to a major one. Oil sands (sometimes known as “tar sands”) are composed of very heavy oil mixed with clay and sand. The oil is so heavy and molasses-like that, for the most part, it does not flow until it is separated from the sand and clay and treated. To do that on a large scale and on a commercial basis has required substantial advances in engineering over the past 15 years.