By SELINA WILLIAMS
LONDON -- Increasing output of shale oil in North America
will put pressure on OPEC to cut its own crude production,
resulting in a global oil supply buffer on a scale not seen
since oil prices were far lower more than 10 years ago, BP said
in its annual energy forecast released on Wednesday.
BP's forecasts illustrate the extent to which the North
American boom, first in shale gas production and now in shale
oil, has redrawn the global energy map.
However, the company doesn't expect the shale revolution to
spread by 2030 on any great scale to Asia or Europe, where conditions for
investment in unconventional oil and gas fall short of those in
North America, BP said.
In the US alone,
shale oil production is expected to grow around 5 million bpd
by 2030, said BP's chief economist Christof Ruehl.
This is likely to be offset by reductions in supply from the
Organization of the Petroleum Exporting Countries, which has
been pumping at historical highs in recent years to compensate
for output losses in Libya due to the civil war there and more
recently to compensate for Iranian sanctions, he added.
"This will generate spare capacity of around 6 million
barrels a day, and there's a faultline if there is higher shale
[production] then the consequences would be even stronger," he
OPEC spare oil production capacity last exceeded 6 million
bpd in February 2002, when the price of US crude benchmark West
Texas Intermediate averaged just under $21/bbl, according to
data from the International Energy Agency.
But the shale revolution will remain largely a North
American phenomenon, Mr. Ruehl said.
"No other country outside the US and Canada has yet
succeeded in combining these factors to support production
growth. While we expect other regions will adapt over time to
develop their resources, by 2030 we expect North America still
to dominate production of these resources," said Mr. Ruehl.
The growth in shale oil and gas production is expected to
remain concentrated in North America over the next two decades
thanks to favorable investment conditions, technological
advances, a competitive services industry and a nimble
financial sector able to fund the large numbers of drilling
rigs required, said Mr. Ruehl.
Growing production from unconventional sources of oil,
including tight oil, oil sands and biofuels, is expected to provide all
of the net growth in global oil supply to 2020, and over 70% of
growth to 2030, the BP report said.
Increasing production from new tight oil resources will
result in the US overtaking Saudi Arabia to become the world's
largest producer of liquids in 2013. By 2030, the US will be
99% self-sufficient in net energy, compared to 70% in 2005.
This comes as major emerging economies such as China and India will become increasingly
reliant on energy imports.
Elsewhere, although there are huge shale deposits outside
North America, development of unconventionals in Europe and Asia have moved much
slower due to greater regulation, government ownership of
mineral rights, environmental concerns and a lack of
infrastructure to drill and transport gas and oil.
OPEC will be under the most pressure to 2015 when spare
capacity is expected to reach the highest levels. The group
will also feel the heat from slowing demand growth due to high
prices and increasingly efficient transport technologies, the
OPEC's market share is expected to rebound somewhat after
Global energy demand is forecast to increase at an average
of 1.6% a year to 2030, driven mostly by non-OECD countries,
with China and India accounting for more than half
of the increase, BP said.
Dow Jones Newswires