The North American shale boom that has transformed the oil industry here will spread beyond the continent before the end of the decade, the International Energy Agency (IEA) said Tuesday in its annual five-year oil market report.
That’s sooner than IEA previously expected. Techniques like hydraulically fracturing or “fracking” in the U.S. have allowed drillers to extract previously inaccessible oil reserves, which has fueled a surge in production and put the country on track to become the world’s largest oil producer by 2020, according to IEA. Shale production has been slow to spread to other countries though, due to legal, political and investment hurdles.
IEA believes these hurdles are melting faster than expected. Russia and Latin America, for example, are set to encourage fracking technologies on a large scale, and last week, IEA said the Golden Age for natural gas would reach China in the next five years.
Still, IEA forecasts shale coil production from outside the U.S. at about 650,000 barrels a day by 2019, a small amount compared to the forecasted 5 million barrels a day from the U.S. in 2019. Though IEA expects North America to produce about 20 percent of the world’s oil supply by the end of the decade, it also expects U.S. oil production growth to plateau.
IEA forecasts a slowdown in global oil demand growth, challenges to OPEC oil production capacity growth, and regional imbalances in gasoline and diesel markets.
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“We are continuing to see unprecedented production growth from North America, and the United States in particular,” IEA Executive Director Maria van der Hoeven said as she released the report in Paris. “At the same time, while OPEC remains a vital supplier to the market, it faces significant headwinds in expanding capacity.”
Ageing fields are plaguing almost every OPEC producer, while security concerns have deterred some investment and international oil companies. As much as three-fifths of OPEC’s expected growth in capacity by 2019 is set to come from Iraq, but the forecast was drafted last week before ISIS seized several key cities in northern and central Iraq.