Natural gas and oil liquids are expected to expand globally, U.S. energy imports will continue declining and a reordering of the fossil fuel mix in North America will prompt a rethinking of domestic energy policy, according to the authors of a study due out later this summer.

New York City-based energy consultants at PIRA Energy Group haven't dotted all the "I'"s or crossed at the "T"'s yet, but President Mark Schwartz said he sees implications for macroeconomic developments and eventual policy shifts in the preliminary results from "The Road to U.S. Energy Independence: The Shale Revolution and Its Implications for North America's Energy Markets."

The natural gas part of the revolution has been ongoing for up to seven years, and Schwartz said PIRA already has chronicled the production and export potential of U.S. gas supplies in earlier reports. The report examines national and regional flows of oil, gas and liquids, and infrastructure constraints, along with what Schwartz called "the implications of all this on flat crude and relative crude pricing."

As an outgrowth of the shale gas and oil booms, liquids are poised to take off, said Schwartz, an economist who holds a doctorate from the University of Pennsylvania. He noted that while the liquids market is still "relatively small and global -- not regional -- we see some of the same aspects of the game-changing developments [for shale gas and oil] certainly for North America, and potentially for the world...

"Prospects for the Bakken and Eagle Ford plays have been revised up, and over time, production from shale plays that are currently known and will to be discovered will account for a greater share of growth. The upside potential from new discoveries is probably greater than the downside, if -- and this is a big 'if' -- crude prices remain at or above current levels."

The projected liquids growth seen by PIRA researchers will not come from crude alone. Both oil and gas drilling will contribute "significantly" to U.S. liquids growth, he said.

PIRA's study is expected to underscore a "structural decline" in energy imports with the robust domestic production growth and the essentially flat demand being projected. The import decline has been underway since 2005, he said.

"This represents a dramatic reversal of both history and expectations for the future. We don't see the United States becoming totally independent of imports, but we're certainly on the road to structural decline. It may also bring about a change in energy policy given that energy security and the drive to reduce dependence on imported oil has tended to be a driver of U.S. energy policy discussions the last four years."

Another factor that PIRA addresses in its upcoming report is that as imports overall decline a growing portion of those imports will be coming from Canada, driven by increase oil sands production and shale development. "When we combine the balances in the U.S. and Canada it is plausible that North America will become a net energy exporter to the world some time in the next decade," Schwartz said.

In this environment, PIRA envisions U.S. Gulf of Mexico imports shrinking; oil pipeline takeaway from Cushing, OK, being sufficient, but upstream there may be bottlenecks forming. Natural gas liquids production during the same time should grow "dramatically." As a result, the United States will become a "more extensive" exporter of energy, Schwartz said.

The upcoming study is scheduled for release in September and will concentrate primarily on liquids, along with implications for gas and alternative fuels, a spokesman said. PIRA plans to provide clients with a written report and a two-day forum in Houston on Sept. 10-11.

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