IEA believe the shale boom is the biggest historical development in the oil and gas industry
The International Energy Agency (IEA) has predicted that the supply increase related to the US shale oil and gas industry will achieve the biggest gains in the history of the oil and gas industry.
The IEA believes that within the next ten years, oil production in the US will rival the rates accomplished by Saudi Arabia at its previous time of expansion. The IEA suggests natural gas rates will also exceed those of the former Soviet Union. IEA state that the shale boom will convert the US, a major oil importer, into a net exporter of fossil fuels. They suggest the shale boom will have dramatic effects on the wider international markets and overall energy security.
Oil prices have now recovered to a two year high, nearing $65 a barrel, which is still only half the trading price several years ago. OPEC, along with Russia, has been focused on implementing production cuts to manage oversupply. The IEA recently increased its estimates in regards to the amount of Shale oil that can be recovered by nearly 30%. Forecasts for shale output by 2025 were also extended by 34% to nearly 9 million barrels a day. The US shale industry has rapidly evolved and become very resilient to any changes in pricing caused by OPEC’s involvement.
The IEA believes that US shale output will gradually decline within the next ten years and the market will once again become more reliant on OPEC, increasing market growth with producers in the Middle East. However, in a recent report by the IEA, they also suggest an alternative scenario where the shale industry exceeds all predictions. If shale resources are potentially higher, combined with the growth and impact of electric vehicles on the oil market, prices could remain lower for an extended period of time.
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