The rapid growth in U.S. oil production has surprised even industry insiders.
Forecasts that once sounded far-fetched are becoming reality. The oil production boom had been expected, but the magnitude of change in such a short period of time is a surprise. U.S. oil production is at its highest level in 20 years, while at the same time U.S. oil demand is at a 17-year low.
The International Energy Agency projects the U.S. could even leap frog Saudi Arabia and Russia to become the world's biggest oil producer by 2020.
"The view I have is the U.S. will be a lot less dependent with Canada. That will really reduce imports, combined with more fuel-efficient cars, from outside North America. We'll still be importing some, but it's certainly a rebalancing of global oil. That oil that was coming to the United States will go somewhere else and that somewhere else would be Asia," said Daniel Yergin, vice chairman of IHS. "The other place where oil demand is really growing happens to be the Middle East."
U.S. oil is already beginning to displace some imports.
"The next shoe to drop, I think, is when the new supply chains start to move substantial amounts of Bakken and Canadian oils to the East Coast, particularly the Bakken that goes head to head with West African crude," he said.
Yergin hosts the annual IHS CERAWeek energy conference, now in its 32nd year, March 4-8. The speakers list represents the world oil industry's who's who, as well as some of its biggest customers, such as FedEx CEO Frederick Smith. Key note speakers include CNOOC CEO Farong Li; BP CEO Bob Dudley; Saudi Aramco CEO Khalid Al-Falih, and Eni CEO Paolo Scaroni.
"One big takeaway is the scale of this unfolding oil and gas revolution in the United States. The fact [that] our oil production is up 40 percent since 2008, and the economic impact it has had on jobs, manufacturing and competitiveness. I think that's a theme that's going to run through it," Yergin said.
The U.S. is expected to produce 7.3 million barrels per day this year, up from 6.4 million in 2012, according to the Energy Information Administration. As would be expected, the amount of oil the U.S. is importing is declining. Imports totaled about 7.7 million barrels per day in the month of February, down 1.2 million barrels per day from he same time last year.
U.S. oil demand for 2012 was 18.56 million barrels per day, down 2 percent from the year earlier and its lowest annual level since 1996, according to the EIA. Oil demand fell every month last year, except for May.
Hydraulic fracturing, or "fracking," has helped lead to this revolution in gas and oil production. The U.S. EIA projects there is 2,200 trillion cubic feet of gas resources in the U.S., enough for 100 years. In drilling for that gas, the industry uncovered a trove of natural gas liquids.
Horizontal drilling is not new, but the wide application of it is, and hydraulic fracturing, which uses water and sand to drill through rock formations, has been combined with it to make billions of more barrels of oil recoverable. Fracking is also the technology behind the shale gas boom.
"When horizontal drilling got married to hydraulic fracturing, the key year was 2003," said Yergin. "That was when it was proof of concept. So for five years, it unfolded quietly with the independents. In 2008, that's when the majors got interested."
Yergin said the conference will also focus on the logistical issues affecting the industry.
"Our logistical system needs to catch up with these new supplies," he said. "Five years ago no one would have thought that North Dakota would be supplying oil to a refinery in Philadelphia."
One pipeline sure to be a topic of discussion at CERAWeek is the Keystone XL pipeline that would connect the Canadian oil sands to refineries in the Gulf of Mexico, 2000 miles away. The pipeline needs President Barack Obama's approval since it crosses the Canadian border. The State Department Friday issued a revised environmental impact statement, which basically provided no conclusive environmental reason why the pipeline should not be built.
The industry saw the statement as one less hurdle facing the controversial pipeline, which is opposed by environmentalists.
Other topics of discussion at the conference include alternative energies, climate change, and how the industry, especially utilities, are equipped to deal with natural disasters such as super storm Sandy.