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Page added on November 12, 2013
Shale’s Effect on Oil Supply Is Not Expected to Last
The boom in oil from shale formations in recent years has generated a lot of discussion that the United States could eventually return to energy self-sufficiency, but according to a report released Tuesday by the International Energy Agency, production of such oil in the United States and worldwide will provide only a temporary respite from reliance on the Middle East.
The agency’s annual World Energy Outlook, released in London, said the world oil picture was being remade by oil from shale, known as light tight oil, along with new sources like Canadian oil sands, deepwater production off Brazil and the liquids that are produced with new supplies of natural gas.
“But, by the mid-2020s, non-OPEC production starts to fall back and countries from the Middle East provide most of the increase in global supply,” the report said. A high market price for oil will help stimulate drilling for light tight oil, the report said, but the resource is finite, and the low-cost suppliers are in the Middle East.
“There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,” said Maria van der Hoeven, executive director of the International Energy Agency. The agency was founded in response to the Arab oil embargo of 1973-74, by oil-importing nations.
The agency’s assessment of world supplies is consistent with an estimate by the United States Energy Department’s Energy Information Administration, which forecasts higher levels of American oil production from shale to continue until the late teens, and then slow rapidly.
“We expect the Middle East will come back and be a very important producer and exporter of oil, just because there are huge resources of low-cost light oil,” Ms. van der Hoeven said. “Light tight oil is not low-cost oil.”
Predicting energy trends is notoriously difficult. For example, hardly anybody predicted the revolution in oil and gas production created by fracking in shale.
The energy outlook, which makes projections through 2035, does not anticipate breakthroughs, although it expects continued reductions in cost for electricity from renewable sources. Electricity from wind and the sun, though, may command less revenue going forward, as it becomes harder to integrate into the electric system, because it cannot be turned on at will.
The report projects that by 2035, renewable energy will make up 18 percent of energy supplies, up from 13 percent in 2011. The growth would be faster, except that wood used in cooking or heating, considered a renewable source of energy, is gradually being replaced by modern fuels, like electricity or natural gas, which increases fossil fuel use.
Use of renewable energy for road transport will more than double, to 8 percent by 2035, from 3 percent today, with most of the demand in the United States, the European Union and China, the report says.
But energy demand will grow faster than renewable energy, so carbon dioxide output will rise 20 percent by 2035, the report predicts. In contrast, climate scientists are calling for an 80 percent reduction in carbon dioxide by 2050.
9 Comments on "Shale’s Effect on Oil Supply Is Not Expected to Last"
rockman on Tue, 12th Nov 2013 9:19 pm
“Predicting energy trends is notoriously difficult. For example, hardly anybody predicted the revolution in oil and gas production created by fracking in shale.” Not quit the case. What no one predicted 10 years ago was $100+ oil. Had they done so many folks would have projected a ramping up of global oil activity. The technology to develop the shales as being done now has been around for 20 years. High priced oil hasn’t been.
rollin on Tue, 12th Nov 2013 10:22 pm
The shale oil “revolution” made a 12 percent difference in oil production.
Rockman is right, many predicted $150 oil by now but it is still around $100.
Others had predicted that energy would be on the collapse by now, that did not happen. So what will happen?
The truly scary part is the continued and increasing CO2 output despite renewables pushing forward. Key West, southern Florida, New York City, the Netherlands and many others are preparing for sea level rise. That is a slow problem, yet inevitable. Preparation will be a temporary stopgap.
The answer is in now, even reaching 500ppm will kick in the natural feedback systems, thus giving the potential to melt all the land based ice. We are headed for 800 to 1000 ppm with BAU so there is little chance to stop global warming. Massive dust bowls, huge storms, loss of rain forests, ocean and land extinctions are all in the future, unless massive changes occur now.
We don’t know when natural feedbacks become self sustaining but unless we remove human factors we will find out.
BillT on Wed, 13th Nov 2013 1:34 am
Humanity is on a suicide ride and the brakes are gone. The car is picking up speed thanks to tar sands and fraking. The cliff looms ahead. We know it is there, but we cannot seem to turn the wheel or slow down. Only the day and time of our demise is not known.
mike on Wed, 13th Nov 2013 7:26 am
As oil prices go higher lower EROEI oil is extracted . As prices go higher economy stutter to halt. As Econimy stutters to halt Oil prices go down. As Oil prices go down, lower EROEI oil extraction is stopped. As Lower EROEI oil extraction is stopped supply goes down. As supply goes down the price of Oil goes up. As the price of Oil goes up lower EROEI is extracted again, although this time at even more expense. Quite simple really.
rollin on Wed, 13th Nov 2013 2:36 pm
Are we seeing the economy halting now with gasoline prices below $3 per gallon in places? Or are we just seeing a temporary glut of oil moving the market downward?
Plantagenet on Wed, 13th Nov 2013 8:37 pm
Considering that some of the US shale formations now producing oil thanks to frakking are thought to contain as much as 50 billion of barrels of oil, we are going to see lots of shale oil for lots of years into the future.
dissident on Wed, 13th Nov 2013 9:50 pm
Yeah, right, Plantagenet. Were those 50 billion barrels of kerogen “oil” or actual oil…
Harquebus on Wed, 13th Nov 2013 9:51 pm
I hope the perpetrators of this fraud are eventually held to account. The world’s economies have already demonstrated that they can not afford unconventional oil. They are still trying to pay off the easy stuff.
nemteck on Wed, 13th Nov 2013 10:10 pm
“Predicting energy trends is notoriously difficult.” An understatement! Or is it because the analysts are told what outcome is desired. It is well-known that the US is interfering with the business of the IEA since they are the largest pay contributor.
The same goes for the EIA.
http://www.worldoil.com/August-2007-Systematic-bias-in-EIA-oil-price-forecasts-Concerns-and-consequences.html
EIA Oil price projection in 2004:
In the reference case, the average lower 48 crude oil price is projected to be $23.61 per barrel in 2010 and $26.72 per barrel in 2025 (Figure 93). In the high world oil price case, the lower 48 crude oil price increases to $32.80 per barrel in 2010 and $34.90 per barrel in 2025. In the low world oil price case, the lower 48 price generally declines to $16.36 per barrel in 2010, then rises to $16.49 per barrel in 2025…”