Tight oil output to double in next ten years: Wood Mackenzie

Oil&Gas Materials 31 October 2018 11:34 (UTC +04:00)

Baku, Azerbaijan, Oct.31

By Leman Zeynalova – Trend:

Tight oil production is expected to double in the next ten years, according to the forecasts of Wood Mackenzie, the global energy, chemicals, renewables, metals and mining research and consultancy group.

“Production of tight oil has leapt from zero six years ago to 5 million barrels per day today and will double to ten or 11 million over the next ten years according our forecasts, which is almost 10 percent of global supply,” said the report released by Wood Mackenzie.

The consultancy group believes that oil majors, that’s to say Big Oil needs exposure to that growth, and the Majors have progressively muscled their way in.

“BP’s $10.5 billion acquisition of BHP’s assets in July is just the latest example of tight oil influencing portfolio strategy. It's a change that’s been underway for the last few years, with the Permian the primary target,” said the report.

Tight oil is now an important driver of growth for most Majors, according to Wood Mackenzie.

“ExxonMobil, Chevron, Shell and BP have all assembled material tight oil assets that include the Permian; Equinor has sizeable Bakken exposure. Roy Martin, a research analyst in corporate research, expects the Majors’ combined tight oil production to climb from 0.7 million barrels per day in 2018 to a peak of 2.2 million in 2026. By then tight oil will be 10 percent of the Majors’ total production, representing one-fifth of liquids. It’s quite a shift from reliance on conventional and deepwater fields,” said the report.

Wood Mackenzie believes that the industrialization of extraction means tight oil is increasingly a scale game.

“Access to capital is key – the big will get bigger. Under bidders for BHP's assets included Shell and Chevron, indicating unsated appetite for the right kind of assets. There’s certainly plenty of opportunity for more consolidation with over 120 operators of some scale operating in the prized Permian Wolfcamp play,” said the report.


Follow the author on Twitter: @Lyaman_Zeyn