Submitted by Daniel J. Graeber of OilPrice.com,
OPEC, in its World Oil Report, said there's an overall sense that developing shale oil and natural gas could start to redefine the global energy mix. In the United States, the cartel said shale natural gas production alone grew by more than 60 percent from 2010 to 2012. For shale oil, supplies in the United States have already passed the 1 million barrel-per-day mark. Though shale reserves may ultimately be a game changer, said OPEC, outside the United States, the sector is in its infancy.
The Organization of Petroleum Exporting Countries published its 300-page World Oil Outlook this week. The cartel said it was "evident that this resource (shale oil and gas) will contribute to the overall energy mix." The cartel found total shale natural gas production in the United States increased from 15 million cubic feet for day in 2012 to 25 billion cubic feet per day two years later. There is a clear potential for shale natural gas on the global energy stage, said OPEC, as clean natural gas starts to replace coal as a source of electricity and becomes a major feedstock in the petrochemicals industry.
U.S. President Barack Obama last year said there was "perhaps a century's worth" of shale natural gas available in his country. The Ohio Department of Natural Resources, in a November report, said the Marcellus shale play contains as much as 363 trillion cubic feet of natural gas. Spanning an area from New York to Ohio, that reserve alone has enough natural gas potential to meet U.S. energy demands for the next 14 years.
In terms of shale oil, OPEC said it expects to see a rise in the importance in the reserve potential, whereas last year, "no significant shale oil contribution to liquids supply was envisaged." Resource development in the Bakken play in the northern plains states, the Eagle Ford play in the U.S. south and the Niobrara formation in an around Nebraska has pushed production over the 1 million barrel per day mark. For its WOO reference case, OPEC said as much as 3 million barrels of shale oil production could emerge per day in the United States by 2035.
OPEC, however, is less optimistic when it comes to a more comprehensive look at shale oil and natural gas. On a global scale, the report finds that shale natural gas production is coming mainly from the United States. Reserves exist elsewhere, like China and Eastern Europe, though the cartel cautioned there are "considerable" uncertainties when it comes to assessing the size of those resources. For shale oil, it said, there's been "no serious attempt" at estimating reserve potential, where recovery factors a "very low."
"Globally, shale oil and gas development is in its infancy, and there are thus considerable uncertainties about the size of the resources, the economics of development and the potential contribution to future supply," the report read.