Events surrounding north american energy production have moved far faster than anyone expected, and in a way that just might bail out the great bungler – the Western world.

Not long ago, I argued that North America could, over decades, approach something akin to energy independence. My prediction was predicated on the U.S. increasing its crude oil production by two million barrels per day (mmbpd) over the next 15 years. Since I wrote that, the combined production of just two shale-oil regions, the Bakken in North Dakota and the Eagle Ford in Texas, has zoomed past two mmbpd, while several other shale-oil projects are also coming on strong.

The Energy Information Administration (part of the U.S. Department of Energy) forecast in March that U.S. oil production will have grown by almost three mmbpd in just three years – by 2015 – and will average 9.2 mmbpd next year, nearing its all-time peak reached in 1970. Combined with Canada’s almost four mmbpd, next year, North America should produce almost two-thirds of the crude oil it consumes. The strategic weapon wielded by OPEC for the past 40 years will have crumbled to dust.

Natural gas is evolving even faster. Last year, I wrote about the gathering momentum to construct the multibillion-dollar infrastructure to export liquefied natural gas (LNG) from western Canada, via pipelines and liquefaction facilities on British Columbia’s Pacific coast, to Asia. That process is accelerating, and Canada’s first LNG exports are expected in 2018.

Even more remarkable is the breathtaking turnaround in the U.S. Barely six years ago, there were more than 40 proposals to build LNG import facilities along both U.S. coasts. A number of these were built. Today, almost all are being converted into export facilities, and LNG shipments are expected to start early next year. Thanks to the horizontal drilling/multi-stage fracturing technology revolution and multiple gigantic shale reservoirs, U.S. natural gas production can be easily turned up.

By 2015, the growth of the past six years will reduce U.S. imports by at least US$120 billion per year (while the other benefits of producing the energy move onshore). U.S. exports of refined fuels, already at almost three mmbpd, add tens of billions more each year.

And, finally, five billion cubic feet (bcf) per day of LNG exports would add another US$18 billion per year, assuming a sale price about halfway between U.S. domestic natural gas prices and landed prices in Asian markets. Some foresee Canadian and U.S. LNG exports growing to 15 bcf per day.

These seismic changes in world energy flows move energy beyond company ledgers and stockholder portfolios and into the realm of a strategic weapon. We could help Europe wean itself off Russian LNG. LNG is one of Russia’s main foreign policy weapons. And, in certain dependent countries, is almost as terrifying as military force. Europe already has extensive LNG import infrastructure. With most of the American LNG facilities facing the Atlantic Ocean, Europe is already the natural market. It can’t come a moment too soon.

More of Koch’s writing can be found at www.drjandmrk.com.

© 2014 Investment Executive. All rights reserved.