October 7, 2015

THE MALTHUSIANS ARE ALWAYS WRONG:

Low oil prices are here to stay as the US shale oil revolution goes global (Robert Aguilera and Marian Radetzki, 8 October 2015, Online Opinion)

Beginning less than a decade ago, the shale oil revolution has turned the long run declining oil production trends in the United States into rises of 73% between 2008 and 2014. An exceedingly high rate of productivity improvements in this relatively new industry promises to strengthen the competitiveness of shale output even further.

A series of environmental problems related to shale exploitation have been identified, most of which are likely to be successfully handled as the infant, "wild west" industry matures and as environmental regulation is introduced and sharpened.

Geologically, the United States does not stand out in terms of shale resources. A very incomplete global mapping suggests a US shale oil share of no more than 17% of a huge geological wealth, widely geographically spread. Given the mainly non-proprietary shale technology and the many advantages accruing to the producing nations, it is inevitable that the revolution will spread beyond the United States.

We have assessed the prospects of non-US shale oil output in 2035, positing that the rest of the world will by then exploit its shale resources as successfully as the United States has done in the revolution's first ten years. This would yield rest of world an output of 19.5 million barrels per day in 2035, which is similar to the global rise of all oil production in the preceding 20 years - a stunning increase with far-reaching implications in many fields.

Another related revolution is beginning to see the light of the day, but news about it has barely reached the media. It is being gradually realised that the advancements in horizontal drilling and fracking can also be applied to conventional oil extraction.

If the rest of the world applies these techniques to conventional oil, as the United State has done, this would yield a further addition of conventional oil amounting to 19.7 million barrels per day by 2035.

Posted by at October 7, 2015 7:02 PM
  

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