• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 1 hour Thugs in Trumpistan
  • 26 mins Model 3 cheaper to buy than BMW 3 series.
  • 2 hours Would bashing China solve all the problems of the United States
  • 5 hours Pompeo's Hong Kong
  • 1 hour Renewables Overtake Coal, But Lag Far Behind Oil And Natural Gas
  • 21 hours China To Boost Oil & Gas Exploration, As EU Prepares To Commit Suicide
  • 2 hours Natural gas is crushing wind and solar power
  • 13 hours China’s Oil Thirst Draws an Armada of Tankers
  • 3 hours Coronavirus hype biggest political hoax in history
  • 5 hours Chicago Threatens To Condemn - Possibly Demolish - Churches Defying Lockdown
  • 12 hours Yale University Epidemiologist Publishes Paper on Major Benefits of Hydroxchloroquine for High-risk Outpatients. Quacksalvers like Fauci should put lives ahead of Politics
  • 7 hours Michael Moore's Controversial "Planet of the Humans" Movie
  • 8 hours The CDC confirms remarkably low coronavirus death rate. Where is the media?
Oil Price Rally Breaks Records In May

Oil Price Rally Breaks Records In May

Early signs of growing demand…

OPEC Won’t Regain Strength Until US Shale Production Slows In 2030s

For OPEC and the rest of the global oil industry, the proverbial light at the end of the tunnel is at least 15 years away. And by then, OPEC will be back as the world leader in energy.

That’s how BP views the glut in crude caused primarily by the continued oil boom in the United States. The recently adopted use of hydraulic fracturing, or fracking, has allowed US energy companies to extract oil from shale that was previous inaccessible, contributing to a market glut and forcing down prices since June.

The price of oil fell further after OPEC decided in November not to reduce its production level of 30 million barrels a day in what Saudi Oil Minister Ali al-Naimi said was a price war to reclaim market share from what he called inefficient oil producers. Fracking is more expensive than conventional oil extraction and isn’t profitable if the price of oil falls below certain levels, often cited as $60 per barrel.

Related: Shale Rivals OPEC As Swing Producer

Nevertheless, US oil companies continue to produce fairly prodigiously, according to the annual BP Energy Outlook 2035, published Feb, 17. Already US production and OPEC’s refusal to shore up prices have caused oil prices to plunge by around 50 percent in the past eight months.

For the immediate future, expect a kind of controlled chaos in the market, BP CEO Bob Dudley said in the introduction to his company’s forecast. “Continuous change is the norm in our industry,” he wrote. “The energy mix changes. The balance of demand shifts. New sources of energy emerge.”

Among those new sources of energy, of course, has been US shale oil, also called tight oil because it is tightly trapped in underground shale formations. The BP outlook says US production will grow rapidly for the immediate future, then “flatten out.” Or, as BP’s chief economist, Spencer Dale, told The Wall Street Journal, “U.S. [shale] oil can’t continue to grow rapidly forever.”

And OPEC will be ready to fill that vacuum when the time is right.

“Middle East production expands after 2020, as North American growth slows,” the report said. “Middle East output increases by a little over 5 [million barrels of oil per day] by 2035,” the final year of BP’s 20-year forecast.

Related: Why Oil Prices Must Go Up

In fact, the report said it expects that OPEC will return to energy dominance as its global market share will grow to 40 percent by 2035, in line with its average share over the past two decades. In a separate interview with Reuters, Dale concluded, “OPEC remains a central force in the oil market for the next 20 years.”

That doesn’t mean that the United States is out of the picture altogether, the BP report said. Shale production may flatten, but won’t stop. “In the US, the increase in tight oil production, coupled with declining demand, transform its reliance on oil imports. Having imported … 60 percent of its total demand in 2005,” it said, “[the] US is set to become self-sufficient [in oil] by the 2030s.”

It also doesn’t mean that extracting shale oil will spread from North America to countries such as Argentina, Britain, China and even perhaps Russia, as some analysts do. When these countries need oil, they’ll turn to OPEC, Dale said in a third interview.

“I’ve read report after report about the impending demise of OPEC,” Dale told the Financial Times. “My hunch is those reports are greatly exaggerated.”

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment
  • Jim on February 19 2015 said:
    The key is that rising OPEC dominance in producing oil DOES NOT equal rising dominance in energy, especially as solar and wind power become cost competitive. Recent efforts by Indonesia and India to eliminate fuel subsidies could ensure that demand flattens sooner than analysts expect. No one foresaw the drop in US driving since 2008, for example. The OPEC economies could find themselves with a much-less powerful asset by 2035 than the BP report suggests.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News