According to a new report, shale oil has the potential to radically change the world’s energy markets by significantly reducing oil prices. The report titled ‘Shale oil – the Next Energy Revolution’ is written by accountancy firm PwC. It estimates that the net effect could be an increase of around £500-£800 in GDP per person in the UK.
The report critically examines the potential impact of future growth in shale oil production on global oil process and on the oil & gas industry up to 2035. It estimates that shale oil production could reach up to 14 million barrels of oil per day by 2035 and push global oil process down by around 25-40 percent in 2035. The figure is relative to an EIA baseline projection of $133 per barrel in that year.
Meanwhile, the UK could achieve an increase in GDP by around £30-50 billion or 2-3.3 percent by 2035, while global GDP could rise by up to 4 percent.
The findings also suggest that shale oil production will spread gradually from its current US base, increasing to almost 12 percent of the world’s total oil supply by 2035. Significant shale gas resources have been identified in the UK and are likely to contribute directly to investment, employment, economic growth and greater energy independence. Moreover, lower oil process could increase UK GDP as it becomes an increasing net oil importer over time.
“Without shale oil, it is likely that global oil prices would continue to rise in real terms over the next few decades due to the pressure of rising demand from China, India and other emerging economies,” said John Hawksworth, Chief Economist at PwC.
The UK has traditionally been a centre of excellence in the oilfield services industry, serving the North Sea and global markets from Aberdeen and elsewhere in the UK, notes Adam Lyons, Director in the PwC Oil & Gas team.
“The UK Government would lose some North Sea tax revenues if global oil prices were lower, but with North Sea resources in long term decline, shale oil & gas present an opportunity to create a new growth engine for UK plc as well as a new source of tax revenue,” Lyons said.