Unconventional oil production beyond North America
The U.S. shale boom masks threats to global oil supply including Middle East turmoil, conflict in Ukraine and the difficulty of unconventional oil production beyond North America, the International Energy Agency said.
“The global energy system is in danger of falling short of the hopes and expectations placed upon it,” the IEA said in its annual World Energy Outlook today. “The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers.”
Global oil consumption will rise to 104 million barrels a day in 2040 from 90 million barrels a day in 2013, driven by demand for transport fuel and petrochemicals in developing countries, the report said. To meet that growth and replace exhausted fields will require about $900 billion a year in investment by the 2030s as oil companies develop fields from Canada’s oil sands to the deep waters off Brazil, the IEA said.
Benchmark oil prices in New York have dropped more than percent this year as crude production in the U.S. reached the highest in 40 years, driven by shale fields in North Dakota and Texas. That’s threatening investment in the global industry as companies try to insulate profits from the price fall. While the near-term picture is secure, the development of capital- intensive areas outside North America is at risk, the IEA said.
Oil futures fell as much as 1 percent to $77.18 a barrel in New York today.
OIL SANDS
In the Canadian oil sands, among the most expensive oil deposits in the world to exploit, a slowdown is already evident and the IEA estimates about a quarter of projects are at risk as prices fall. Norway’s Statoil ASA and France’s Total SA have both delayed projects in the region this year.
Likewise, the complexity and capital intensity of developing Brazil’s deepwater fields could also contribute to a shortfall in investment.
