Americas are new frontier in oil world
Center of gravity in oil world shifts to Americas
A derrick at work in the middle of the desert in El Chanar in energy-rich Neuquen province, southern Argentina.
Juan Forero/The Washington Post
LOMA LA LATA, Argentina — In a desertlike stretch of scrub grass and
red buttes, oil companies are punching holes in the ground in search of
what might be one of the biggest recent discoveries in the Americas:
enough gas and oil to make a country known for beef and the tango an
important energy player.
The environment is challenging, with resources trapped deep in
shale rock. But technological breakthroughs coupled with a feverish
quest for the next major find are unlocking the door to oil and natural
gas riches here and in several other countries in the Americas not
traditionally known as energy producers.
That is quickly changing the dynamics of energy geopolitics in a way that had been unforeseen just a few years ago.
From
Canada to Colombia to Brazil, oil and gas production in the Western
Hemisphere is booming, with the United States emerging less dependent on
supplies from an unstable Middle East. Central to the new energy
equation is the United States itself, which has ramped up production and
is now churning out 1.7 million more barrels of oil and liquid fuel per
day than in 2005.
“There are new players and drivers in the
world,” said Ruben Etcheverry, chief executive of Gas and Oil of
Neuquen, a state-owned energy firm that is positioning itself to develop
oil and gas fields here in Patagonia. “There is a new geopolitical
shift, and those countries that never provided oil and gas can now do
so. For the United States, there is a glimmer of the possibility of
self-sufficiency.”
Oil produced in Persian Gulf countries —
notably Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq —
will remain vital to the world’s energy picture. But what was once a
seemingly unalterable truth — that American oil production would
steadily fall while the United States remained heavily reliant on Middle
Eastern supplies — is being turned on its head.
Since 2006,
exports to the United States
have fallen from all but one major member of the Organization of the
Petroleum Exporting Countries, the net decline adding up to nearly 1.8
million barrels a day. Canada, Brazil and Colombia have increased
exports to the United States by 700,000 barrels daily in that time and
now provide nearly 3.4 million barrels a day.
Six Persian Gulf
suppliers provide just 22 percent of all U.S. imports, the nonpartisan
U.S. Energy Information Administration said this month. The United
States’ neighbors in the Western Hemisphere, meanwhile, provide more
than half — a figure that has held steady for years because, as
production has fallen in the oil powers of Venezuela and Mexico, it has
gone up elsewhere.
Production has risen strikingly fast in places
such as the tar sands of Alberta, Canada, and the “tight” rock
formations of North Dakota and Texas — basins with resources so hard to
refine or reach that they were not considered economically viable until
recently. Oil is gushing in
once-dangerous regions of Colombia and far off the coast of Brazil, under thick salt beds thousands of feet below the surface.
A
host of new discoveries or rosy prospects for large deposits also has
energy companies drilling in the Chukchi Sea inside the Arctic Circle,
deep in the Amazon, along a potentially huge field off South America’s northeast shoulder, and in the roiling waters around the Falkland Islands.
“A
range of big possibilities for oil are opening up,” said Juan Carlos
Montiel, as he directed a team from the state-controlled company YPF to
drill while a whipping wind brought an autumn chill to the potentially
lucrative fields here outside Añelo. “With the exploration that is being
carried out, I think we will really increase the production of gas and
oil.”
Because oil is a widely traded commodity, analysts say the
upsurge in production in the Americas does not mean the United States
will be immune to price shocks. If Iran were to close off the Strait of
Hormuz, stopping tanker traffic from Middle East suppliers, a price
shock wave would be felt worldwide.
But the new dynamics for the
United States — an increasingly intertwined energy relationship with
Canada and more reliance on Brazil — mean U.S. energy supplies are more
assured than before, even if oil from an important Persian Gulf
supplier is temporarily halted.
The fracking ‘revolution’
Perhaps the biggest development in the worldwide realignment is
how the United States went from importing 60 percent of its liquid fuels
in 2005 to 45 percent last year. The economic downturn in the United
States, improvements in automobile efficiency and an increasing reliance
on biofuels all played a role.
But a major driver has been the
use of hydraulic fracturing. By blasting water, chemicals and tiny
artificial beads at high pressure into tight rock formations to make
them porous, workers have increased oil production in North Dakota from a
few thousand barrels a day a decade ago to nearly half a million
barrels today.
Conservative estimates are that oil and natural gas
produced through “fracking,” as the process is better known, could
amount to 3 million barrels a day by 2020.
“We have a revolution
here,” said Larry Goldstein, director of the Energy Policy Research
Foundation in New York. “In 47 years in this business, I’ve never seen
anything like this. This is the equivalent of a Category 5 hurricane.”
All
of this has happened as exports from Mexico and Venezuela have fallen
in recent years, a trend analysts attribute to mismanagement and lack of
investment at the state-owned oil industries in those countries. Even
so, there is a possibility that new governments in Mexico and Venezuela —
Mexico elects a new president July 1, and Venezuelan President Hugo
Chavez has cancer — could open the energy industry to the private
investment and expertise needed to boost production, analysts say.
“There’s
a lot of upside potential in Latin America that will boost the oil
supply over the medium term,” said RoseAnne Franco, who analyzes
exploration and production prospects in the region for the energy
consultant Wood Mackenzie. “So it’s very positive.”
Political elements
Rigs at work amid the scrub grass of Anelo,
Argentina, in a region called Vaca Muerta, or Dead Cow, which is now
known for its potentially huge deposits of oil.
Juan Forero/The Washington Post
Much of the exploration, though, will not be easy, cheap or, as
in Argentina’s case, free of political pitfalls. Price controls on
natural gas and import restrictions have made doing business in
Argentina hard for energy companies. And last month, President Cristina
Fernandez de Kirchner’s populist government stunned oil markets by
expropriating YPF, the biggest energy company here, from Spain’s Repsol.
But the prize for energy companies is
potentially huge.
Repsol estimated this year that a cross section of the vast Dead Cow
formation here in Neuquen province could hold nearly 23 billion barrels
of gas and oil. That followed a U.S. Energy Information Administration
report that said Argentina possibly has the third-largest shale gas
resources after China and the United States.
“All the
top-of-the-line companies are here,” said Guillermo Coco, energy
minister of Neuquen province, including ExxonMobil, Chevron and Royal
Dutch Shell. Although only about 200 wells have been drilled, Coco said
companies here talk of drilling 10,000 or more in the next 15 years.
Wells on the horizon
On a recent day here in a dusty spot called Loma La Lata, German
Perez oversaw a team of 30 technicians from the Houston-based oil-
services giant Schlumberger as they prepared to frack a well.
The
operation was huge: Trucks lined up with revving generators. Giant
containers brimmed with water. Hoses used for firing chemicals into
wells littered the ground. Cranes hoisted huge bags of artificial sand
into mixers. Then, 1,200-horsepower pumps blasted water, chemicals and
sand nearly 9,000 feet into the earth. “This is a hard rock, so we
create countless cracks and fissures, for the gas and oil to flow,”
Perez said.
Staring at the stark landscape, broken up here and there by oil rigs, Perez
said he thought many companies would one day arrive in search of oil
and gas. “The projections are pretty good,” he said. “In our case, we
have been here a year and a half and we have tripled the equipment we
have. And we think we will double that in another year.”
ALEJANDRO ACOSTA/REUTERS 
