The Age of Cheap Oil and Natural Gas Is Just Beginning, by Marian Radetzki and Roberto F. Aguilera. Fracking and horizontal drilling have sent supplies through the roof and prices through the floor, and things are likely to stay that way.
[We] believe the period of excessively high oil prices has come to an end. The international spread of two revolutions will assure much ampler oil supplies, and will deliver prices far below the highs that reigned between the end of 2010 and mid-2014.
First, production from shale is rapidly gaining in productivity, and will spread beyond the US:
Beginning less than a decade ago, the shale revolution – a result of technological breakthroughs in horizontal drilling and fracking – has turned the long run declining oil production trends in the US into rises of 88% from 2008 to 2015. … an exceedingly high rate of productivity improvements in this relatively new industry promises to strengthen the competitiveness of shale output even further. …
Geologically, the US 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.
By 2035, shale will add 20 million barrels per day, worldwide.
Second, the new technologies can extract more oil from old 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 realized that advancements in horizontal drilling and fracking, technologies normally associated with shale, can also be applied to fuller extraction from conventional, but old and tired, oil fields. If the rest of the world applies these techniques to conventional oil, as the US has done in recent years, this would yield a further addition of conventional oil amounting to 20 million barrels per day by 2035.
This changes the outlook from the “peak oil” scenarios that were widely believed until recently:
The two revolutions will apparently cement and prolong the global oil dependence…
- Renewable energy will continue to require large subsidies.
- Oil producing nations will have less income. The Arab countries of the Middle East will become relatively poorer, and perhaps Saudi Arabia will be less inclined to bankroll fundamentalist Islam around the world.
- The geopolitical importance of the Middle East will decline.