Dynamics within the oil business are famously difficult to interpret and predict. Still, certain hard facts about the industry remain well known — for example, that oil accounts for some 40% of U.S. energy consumption, or that the major companies in this sector have made huge profits in the recent years. The oil future will be influenced not only by geopolitical factors but also advanced industrial techniques such as hydraulic fracturing, or “fracking,” that have the potential to unleash new resources, but don’t come without significant health risks and controversy.

A 2012 study from the Harvard Kennedy School’s Belfer Center for Science and International Affairs surveys the horizon of global oil production, knitting together a variety of emerging factors in order to make projections about the future of oil. The study, “Oil: The Next Revolution,” analyzes trends across the industry and considers the potential impact of various exploration projects.

The study’s author asserts that:

• By 2020, global oil output capacity could grow by nearly 20% — from 93 million barrels a day to 110 million: “This would represent the most significant increase in any decade since the 1980s.”
• An increase in global oil output by a net 17.5 million barrels a day by 2020 is the most likely scenario, given the constraints of various technical, financial and political risk factors, as well as the decline of some existing sources.
• The most surprising country with a potential surge in petroleum output is the United States: “Thanks to the technological revolution brought about by the combined use of horizontal drilling and hydraulic fracturing, the U.S. is now exploiting its huge and virtually untouched shale and tight oil fields.”
• For the United States, this could ultimately mean that it could become the “second largest oil producer in the world after Saudi Arabia. Adding biofuels to this figure, the overall U.S. liquid capacity could exceed 13 million barrels a day, representing about 65% of its current consumption.”
• “After considering risk factors, depletion patterns and reserve growth, four countries show the highest potential in terms of effective production capacity growth: They are, in order, Iraq, the U.S., Canada, and Brazil. This is a novelty, because three out of four of these countries are part of the western hemisphere, and one only — Iraq — belongs to the traditional center of gravity of the oil world, the Persian Gulf.”

“For the first time, new areas of the world — from sub-equatorial Africa to Asia and Latin America — are being targeted for mass exploration, and unveiling the potential for significant conventional oil production over the next years,” the author notes. “Furthermore, the combination of high oil prices, advanced technologies that were once uneconomical, and restricted access to conventional oil resources in the major oil-producing countries is pushing private oil companies to explore and develop unconventional oils on a broader scale.”

Tags: fossil fuels

By John Wihbey | July 5, 2012