From the International Energy Agency’s press release today:
The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15, the International Energy Agency (IEA) said in its annual Medium-Term Oil Market Report (MTOMR) released today. The shift will not only cause oil companies to overhaul their global investment strategies, but also reshape the way oil is transported, stored and refined.
According to the MTOMR, the effects of continued growth in North American supply – led by US light, tight oil (LTO) and Canadian oil sands – will cascade through the global oil market. Although shale oil development outside North America may not be a large-scale reality during the report’s five-year timeframe, the technologies responsible for the boom will increase production from mature, conventional fields – causing companies to reconsider investments in higher-risk areas.
“North America has set off a supply shock that is sending ripples throughout the world,” said IEA Executive Director Maria van der Hoeven, who launched the report at the Platts Crude Oil Summit in London. “The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves. But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.”
From the report’s overview:
Following several years of stronger-than-expected North American supply growth, the shockwaves of rising United States (US) shale gas and light tight oil (LTO) and Canadian oil sands production are reaching virtually all recesses of the global oil market. This North American supply revolution is not happening in a vacuum. Sustained high oil prices helped unleash it. Its impact is also compounded by other market developments, most prominently social and political turmoil in the MENA region in the wake of the ‘Arab Spring’ and the shift in demand to East-of-Suez markets. Together, these powerful forces are redefining the way oil is being produced, processed, traded and consumed around the world. There is hardly any aspect of the global oil supply chain that will not undergo some measure of transformation over the next five years, with significant consequences for the global economy and oil security.