We hear a lot about the shale oil boom in this part of the country where, to the surprise of many coming in from out-of-town, gasoline prices are relatively inexpensive at around $3 a gallon (see this item from last week and GasBuddy’s heat map for more on this). This Globe & Mail story about the shale oil boom (that also extends into Canada) touches on some of the other ways in which North American and global energy markets are diverging.

Some analysts believe the growth in production in North America will continue to exceed market expectations and will swamp the mid-continental region with oil, driving down the benchmark U.S. crude, West Texas intermediate, and forcing Canadian producers to accept steep discounts on WTI prices.
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Combined with lower demand and increased biofuel production, growth in oil output has resulted in a reduction of U.S. imports to 8 million barrels per day at the end of 2011, from 13 million barrels per day in mid-2007. Imports as a percentage of U.S. demand dropped to 45 per cent last year, from 60 per cent in 2005.

In recent report, Citigroup analysts forecast that additional tight oil production could add as much as 3 million barrels per day to U.S. supply by 2020, with the Gulf of Mexico output climbing by another 2 million barrels per day.

In addition to North Dakota’s booming Bakken, more production is expected in Texas’s Eagle Ford and Permian Basin, Colorado’s Niobara, Louisiana’s Mississippi Lime, Ohio’s Utica and the Monterey basin in California, a state that the U.S. Energy Information Administration estimates could hold 15 billion barrels of recoverable reserves, several times greater than the Bakken.

Energy companies are wished good luck in their attempt to begin fracking off the coast of California, though, with the state’s budget situation as it is, maybe it’s not as far fetched as it once was. The Citigroup report went so far as to say that the theory of “peak oil” is now dead, an idea that is more believable when realizing that there are Bakken oil formations in many other parts of the world – not just here in North America.