Vienna - Opec oil producers are not worried about the shale
revolution. They might need to re-run their numbers.
The United States imported 4.5 million barrels per day (bpd) of Opec
crude last year, 20% of the cartel’s exports and about half the country’s
But thanks to new technologies like hydraulic fracturing now
sucking away on North American soil, the continent is already self sufficient
in natural gas, and is eyeing an even bigger landmark - Opec-free oil supplies.
The US was the fastest-growing non-Opec oil producer in 2011
for the third year in succession, the annual BP statistical review released on
US oil production is up 1 million bpd since 2006 to 7.84
million bpd, consumption is down 1.85 million to 18.84 million.
“In 1990, North American reserves and production were
falling but thanks to unconventionals, proved reserves have risen 68%
since then,” ConocoPhillips CEO Ryan
Lance told an audience of Opec ministers on Wednesday.
“North America could become self sufficient in oil as well
(as gas) by 2025,” he said at a conference before Opec’s policy-setting meeting
State oil company Saudi Aramco, the world number-one oil
producer, has acknowledged the North American boom in shale, tar sands and
other so-called unconventional production, but its prediction in November was
far less explosive, at 6.6 million bpd - still well short of US
needs, and not until 2035.
And Opec ministers gathering to decide output policy caps
took a relaxed view of the threat that shale oil might pose.
“Oil from the Middle East will always find a home,” said
Kuwaiti Oil Minister Hani Hussein. “And we have to wait to see more research to
get a better idea about the impact of
shale oil development.”
“No, I’m not worried at all, they are only projections,”
agreed Rafael Ramirez, his Venezuelan counterpart. He scoffed at the idea that
“shale oil will come to the rescue of consumers, allowing them to shake off the
yoke of Opec”.
But the US government’s Energy Information Administration
has repeatedly torn up its forecasts as shale and oil sands change the game at
So should Opec fret a little more?
“In some ways they should. Not because North America may
become self sufficient, but for the reasons why,” said Paul Stevens, a senior
research fellow at the Chatham House Royal Institute of International Affairs
“Given the changes in technology involved, if that is
applied elsewhere then the assumption that all future increase in global demand
will be filled by Opec is called into question.”
Stevens makes an important point. Unconventional oil
reserves are spread in a different pattern from traditional ones. Even resource
starved world number one oil importer China has some, and non-Opec Russia
appears to have the biggest of them all.
“If I was an Opec minister I would be concerned,” he said.
“This could be significant.”
The recent sharp drop in US oil prices from above $100 a
barrel in March to near $80 today could yet slow the march of the
unconventional producers and - ironically as Opec hawks call for production
cuts to send it back up - buy members some time.
Top exporter Saudi Arabia might even be tempted at some
point, as it has done in the past, to use its production muscle to force down
prices to retain market share by making higher cost production uneconomic.
Operating costs of Canadian tar sands - the most marginal of
current unconventional production - is about $60 a barrel. Most analysts agree
that a fall to that level would start to impact production there and push new
projects into the future.
The state-of-the-art US Port Arthur refinery extension, run jointly
by Saudi Aramco and Shell, is designed to use for Saudi crude is also “a foot
in the door for Saudi into the US market for the long run” according to a
Middle East-based executive of a major international oil company.
He said Opec,
and Middle East producers in particular, will increasingly have to look east
for their markets in future.
At its 161st meeting, the 52-year-old Organisation of
Petroleum Exporting Countries that has survived the offshore drilling boom and
any number of price slumps maintains its confidence.
“That’s good,” said secretary general Abdullah al-Badri of
the prospect for US oil self-sufficiency. “We want everybody to be self
"But there will be a place for Opec oil whatever happens.”