A U.S. oil boom led by shale production is giving the United States an edge in energy production and international diplomacy.

CGTN’s John Terrett reports.

When you first see the Bayway oil refinery it takes your breath away a little bit. Twenty minutes outside New York on the Jersey side of the Hudson River it’s a rumbling, rattling, steaming city of pipes, cylinders, and metal chambers – the northern most refinery on the east coast.

Crude arrives by ship from the North Sea, Canada, West Africa and by train from the Bakken shale in North Dakota.

After a painful couple of years in which U.S. shale oil producers downsized and laid-off workers, rising oil prices mean they’re ramping up production again … the International Energy Agency said the U.S. is about to surpass Saudi Arabia and rival Russia in oil production around the end of this year.

“I think in the 40 years I’ve been in the business the impact of shale and how quickly it grew is probably the biggest single surprise that I’ve seen in the market,” Mark Schwartz, S&P Global Platts, head of Scenario Planning said.

Mark and his colleague Rene are two of the top oil analysts in New York.  We stopped in a corridor to admire art work on the walls showing various oil installations … and they said the number of shale oil rigs has almost doubled in two years – and they’re more efficient then ever.

“This is the strongest sustained growth in oil production that we’ve ever seen in any place in history, even the most rapid build-up years of Saudi Arabia didn’t add as much supply in a short period of time as what we’ve seen from U.S. shale”

Land based shale oil producers drill around ten thousand wells a year – compared to maybe one hundred in the Gulf of Mexico. 

“The reason is because it’s onshore and there’s a lot of relatively shallow wells so you don’t drill that deep verses when you go off shore you drill very deep and also you need some special facilities it takes about three to five years to get on production offshore – onshore in about three months you get a well of production so the cycle time is totally different that helps you,” Rene Santos, S&P Global Platts Senior Director of Analysis said.

So it seems this is really happening – the U.S. independent or almost independent – of traditional oil producers like Venezuela, Nigeria and even Saudi Arabia by year’s end – exporting to some of those place too – who’d have thought it possible just five or ten year’s ago?

So what does that mean for U.S. diplomatic relations?

“Clearly it’s given us a lot more opportunity to swagger,” Carolyn Kissane, Ph.D, academic director, at NYU, SPS Center for Global Affairs said.

Kissane said shale oil means U.S. imports far less crude these days … down from around 80 percent of its needs to about 10 percent.

“Ask yourself ‘would the U.S. have ignored Venezuela as a failing state if it needed it’s oil? … or imposed as many tough sanctions on Tehran if it still relied on steep imports from Iran?,” she said.

“This administration is saying energy dominance and I think the term implies that we can dominate in global affairs that we have a lot more freedom and leverage in terms of how we interact and what our position is in the world – because of oil? – because of oil”

And that’s a position every U.S. administration has been trying to “refine” for at least the past fifty years.

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Carl Larry talks about recent decline in oil prices

CGTN’s John Terrett spoke to Carl Larry about oil prices fell on Wednesday. He’s a Commodities Markets Specialist at Thomson Reuters, in Houston.