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Unconventional oil revolution: Beyond North America

Oilfield Technology,

In its five year annual oil market outlook, the IEA has said that the unconventional oil revolution could most likely expand beyond North America before the end of the decade. The report has also said that global oil demand growth is slowing, OPEC capacity growth is facing headwinds and growing regional imbalances are appearing in gasoline and diesel markets.

Medium Term Oil Market Report 2014

The above report says that while no single country outside of the US offers the unique mix of above and below ground attributes that made the shale and light, tight oil (LTO) boom possible, several are seeking to replicate the US’s success. The report projects that by 2019, tight oil supply outside the US could reach 650 000 bpd, including 390 000 bpd from Canada, 100 000 bpd from Russia and 90 000 bpd from Argentina. US LTO output is forecast in the report to roughly double from 2013 levels to 5 million tpy by 2019.

Aging fields have been labelled as an issue for almost all OPEC producers, but above ground woes have escalate: security concerns are a growing issue in several producers and investment risks have deterred some international oil companies. The report also notes that as much as three fifths of OPEC’s expected growth in capacity by 2019 is set to come from Iraq. The projected addition of 1.28 million bpd to Iraqi production by 2019, a conservative forecast made before the military campaign began last week that subsequently claimed several key cities, faces considerable downside risk.

The annual report, which gives a detailed analysis and five year projections of oil demand, supply, crude trade, refining capacity, and product supply, sees global demand rising by 1.3%/y to 99.1 million bpd in 2019. Yet the report also expects the market to hit an inflexion point, after which demand growth may start to decelerate due to high oil prices, environmental concerns and cheaper fuel alternatives. This will lead to fuel switching away from oil, as well as overall fuel savings. In brief, while peak oil demand, other than in mature countries, may still be years away, and while there are regional differences, peak oil demand growth for the market as a whole is already in sight.


Maria van der Hoeven, IEA Executive Director said, ‘we are continuing to see unprecedented production growth from North America, and the US in particular. By the end of the decade, North America will have the capacity to become a net exporter of oil liquids. At the same time, while OPEC remains a vital supplier to the market, it faces significant headwinds in expanding capacity.’

Adapted from press release by Claira Lloyd

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