The primary source of energy globally is oil and gas, which make up a whopping 52%. Currently, the United States is the largest producer of these resources, accounting for 25% and 20% of gas and oil output globally. Last year, America was the biggest exporter of liquified natural gas.
The country has seen its production increase threefold over the past decade or so, largely because of the shale revolution which saw the production of natural gas and oil surge dramatically mainly due to the application of horizontal drilling and hydraulic fracturing techniques to extract these resources from shale rock formations.
Now a recently released report has determined that America may have difficulty increasing its domestic gas and oil production beyond 2030.
The report by Wood Mackenzie highlights that the country will have to address a number of challenges including the current shift towards renewable sources of energy to maintain its dominance. If it doesn’t, projections expect that the U.S. will see its oil and gas production drop by roughly 1.7 million barrels of oil equivalent per day between 2035-2040.
The forecasts expect that by early 2030s, oil production volumes will begin declining, noting that if expectations for demand deteriorate, the drop would be more severe and occur much sooner. Other factors that could impact America’s dominance in this market include cross-border carbon taxes, tariffs, and resource maturation.
The authors believe that these factors would, in turn, make it harder for America to raise capital for big investments while also reducing the number of parties purchasing the country’s energy exports.
So, what measures can be implemented to prevent this?
The report calls attention to the need for America to focus on its fortes to extend or preserve its current dominance. For instance, the U.S. may benefit from investing in shale innovation, which could reduce the cost of supply while also encouraging exploration to help decrease overdependence on already producing assets.
America could also improve supply chains and encourage tech innovation, in turn helping producers lower breakeven costs for shale development. A good example of a tech initiative that could reduce supply costs is subsurface diagnostics and reservoir models, pioneered by ExxonMobil.
The authors also underscore the need for midstream investments to make new opportunities as feasible as existing assets. Additionally, they note that America may need to reduce its reliance on the upstream sector as the move toward lower carbon energy sources continues to gain traction.
Entities like GEMXX Corp. (OTC: GEMZ) are likely to analyze this report and get insights that point to opportunities that they can leverage to spur their growth in the oil and gas industry.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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