Shale oil: the next energy revolution

The global impact of shale oil could revolutionise the world’s energy markets over the next couple of decades, resulting in significantly lower oil prices, higher global GDP, changing geopolitics and shifting business models for oil and gas companies, according to new analysis from PwC.

The potential availability and accessibility of significant resources of shale oil around the globe - and the potential effect of increased shale oil production in limiting growth in global oil prices - has implications that stretch far beyond the oil industry.

Shale oil has the potential to reshape the global economy, increasing energy security, independence and affordability in the long term. However, these benefits need to be squared with broader environmental objectives at both the local and global level.

The effects of a lower oil price resonate along the entire energy value chain, and investment choices based on long-term predictions of a steady increase in real oil prices may need to be reassessed. The potential magnitude of the impact of shale oil makes it a profound force for change in energy markets and the wider global economy. It is therefore critical for companies and policy-makers to consider the strategic implications of these changes now.


Preview some charts inside this report

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EIA US technically recoverable shale oil assessments by basin made between 2005 and 2010

WTI and Brent Oil Price Spread (2004-12)

Global liquids production by resource


Forecast of OPEC production in PwC reference case vs. EIA reference case

Forecast oil price incorporating impact of shale oil production vs. EIA reference case

Global economic benefits from a lower oil price (% of world GDP)


Change in national GDP in oil price scenarios (relative to baseline)

Change in current account balance as % of GDP in alternative oil price scenarios

Change in real household consumption in alternative oil scenarios

Interesting observations from this report:

Shale oil (light tight oil) is rapidly emerging as a significant and relatively low cost new unconventional resource in the US.


Global shale oil production has the potential to reach up to 14 million barrels of oil per day by 2035; this amounts to almost 12% of the world’s total oil supply.


The benefits of oil price reductions will vary significantly by country. Large net oil importers such as India and Japan might see their GDP boosted by around 4%-7% by 2035, while the US, China, the Eurozone and the UK might gain by 2%-5% of GDP.


Major oil exporters such as Russia and the Middle East could see a significant worsening of their trade balances by around 4%-10% of GDP in the long run if they fail to develop their own shale oil resources.


The potential emergence of shale oil could influence the dynamics of geopolitics as it increases energy independence for many countries and reduces the influence of OPEC.


National and international oil producers will need to review their business models and skills in light of the very different demands of producing shale oil onshore rather than developing complex “frontier” projects on which most operations and new investment is currently focused.


Lower than expected oil prices could create long-term benefits for a wide range of businesses with products that use oil or oil-related products as inputs (e.g. petrochemicals and plastics, airlines, road hauliers, automotive manufacturers and heavy industry more generally).

Shale oil: the next energy revolution
 

EIA US technically recoverable shale oil assessments by basin made between 2005 and 2010

Shale oil: the next energy revolution
 

WTI and Brent Oil Price Spread (2004-12)

Shale oil: the next energy revolution
 

Global liquids production by resource

Shale oil: the next energy revolution
 

Forecast of OPEC production in PwC reference case vs. EIA reference case

Shale oil: the next energy revolution
 

Forecast oil price incorporating impact of shale oil production vs. EIA reference case

Shale oil: the next energy revolution
 

Global economic benefits from a lower oil price (% of world GDP)

Shale oil: the next energy revolution
 

Change in national GDP in oil price scenarios (relative to baseline)

Shale oil: the next energy revolution
 

Change in current account balance as % of GDP in alternative oil price scenarios

Shale oil: the next energy revolution
 

Change in real household consumption in alternative oil scenarios