Posted on 07/09/2012 6:01:54 AM PDT by thackney
Oil unlocked from shale formations is set to create a supply glut that could push down crude prices, according to a new study.
Global production capacity at oilfields will increase by 17.6 million barrels per day (bpd) over the next eight years thanks in part to shale, the most significant increase in any decade since the 1980s, according to Leonardo Maugeri, a research fellow at Harvard Kennedy School's Belfer Center for Science and International Affairs.
"Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption," wrote Mr Maugeri, who is also a former senior vice president for corporate strategy and planning at Italy's Eni. "This could lead to a glut of overproduction and a steep dip in oil prices."
The United States and Iraq are forecast to lead the production increase through 2020, with Saudi Arabia, Russia and China contributing more modest additions. Pumping levels are forecast to decline in Iran, Mexico and the United Kingdom.
US producers of shale oil need crude to be priced only above US$50 to $65 a barrel for their operations to remain profitable.
The development of shale oil has already made North Dakota, home of the Bakken formation, a bigger oil producer than the Opec member Ecuador. Mr Maugeri writes that North Dakota and its neighbour Montana could become the equivalent of a large Gulf producing country within the US.
Great post Thack.
You are the FR authority on petroleum.
This is very positive news, if the global warming nuts will actually let us burn the stuff.
This can’t possibly be true, our dear leader told us so.
It must be because people are following dear leaders instruction to air up their tires.
Isn’t this what Obama is planning to do away with a second term?
This number is declining as the experience levels in extracting oil from various shale plays rises.
Of course, investment in R&D is lowering this price.
With the right leader, we could return to $30 per barrel prices within 10 years.....a price that would be far more stable than today's prices due to the reduction of imports from unstable countries.
Just because it doesn’t exist doesn’t mean we shouldn’t be using it.
My goodness...imagine that: more supply and prices fall. Man, is Obozo going to be PO’ed. By closing off ANWAR, off shore and deep water drilling and killing the Keystone project, he’s keeping the price of oil high so his OPEC friends can squeeze us dry. This hopey-changy thing kinda sucks.
I remember driving across Texas and Oklahoma years ago thinking about the wells that were pumping and those that were not. Then it hit me: that one is a $30 dollar well and that one is a $40 well.
That being said, I can see Obama cutting a deal with Saudi to increase OPEC production/lower oil prices in order to 1) make US shale production unprofitable, and 2) increase business activity due to cheaper fuels.
Is it the doing of the EPA or Congress? I didn’t think the EPA had this authority.
Yes, he will. By decree of course, bypassing a Republican congress.
Shale oil is being pumped on state and private land. Obama can't touch it. What he can do is go after the fracking technique used to recover the oil from the shale.
Good post, Thackney.
I’m in the Eagle Ford right now and some of our original facilities that were built only a year or so ago are at full capacity and we’re now going back in them adding additional stabilizers, coolers, storage capacity, etc.
Now...if we can just keep the communists in DC at bay and let us do what we do best, then yeah, we can drive that price down, especially as more experience comes into play, especially on those newer trends out there. There’s more oil right here in the USA than most people realize, but you’ll never hear about it out of DC on the lame stream media.
Bump
The EPA probably couldn't tax by itself so I think it is something that Boama’s congress did and the EPA is over enforcing. Obama could stop it if he wanted to but he has seen no tax that he did not like.
I tell anyone that will listen that we are in the biggest oil boom in the history of the world and prices should start reflecting that, dramatically.
I’m asking your honest opinion: Am I full of sh**?
Keep on drilling and Fracking...... Its a good thing for America. oBummer hates anything that is good for his aMerIka. But we need to take the White House back in 2012.
Yes, more oil will drive prices down, but that doesn’t mean the Obama admin and his leftist flunkies are happy. They’ve painted themselves into a corner...an ideological one. In 2008 they blamed high gas prices on the Bush admin which caused distress for the middle class. But all the while the Obama team was for destroying oil-based economies and replacing them with that “wonderful” green technology. Which doesn’t exist or can’t work on a large scale. So now they have to pretend to be happy with lower gas prices while in reality they’re cursing all the shale-oil and frackers who’ve disproved the “peak oil” fallacy once again.
FWIW, Obozo and his amen chorus in the national media just completed a rally in Pittsburgh last week. One of the biggest “accomplishments” which they advertised was “most domestic oil production in U.S. history.” I’m serious. As if Obozo had anything to do with it.
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