At this point in time, shale oil production outside the US and Canada does not look like a structural game change for oil prices, said Bank of America Merrill Lynch in its latest report.“While the potential is great, we only see net additions of 280 thousand b/d outside the US and Canada in shale oil. As with conventional oil, shale projects lack the right policy framework. For Russia, we project a scenario of peak tight oil output of 250 thousand b/d in 2018. In Argentina, we believe 50 thousand b/d by 2017 is achievable, far below the government’s aspirations but well above current drilling program indications,” the report noted.
Mexico could also expand greatly, but foreign participation requires a constitutional change and major energy sector reform. In sum, the vast resource potential warrants keeping a close eye on shale oil. However, at this point in time, shale oil production outside the US and Canada does not look like a structural game change for oil prices, report said.
The development of shale oil has been a game changer for North America. Aggressive exploration of shale resources has resulted in a surge in US crude oil output to 7.3 million b/d, with production in the Lower 48 states increasing at a yearly rate of 920 thousand b/d, or 22%.
Much of the growth has occurred in shale plays like the Bakken, Eagle Ford and Permian, where output surged from 0.2 to 1.6 million b/d in just five years. Shale oil is starting to flourish in Western Canada too, and it is also inspiring the development of shale oil plays around the world.
Shale oil plays seem less widespread than shale gas resources, though. Outside of North America, Russia’s Bazhenov basin is the largest tight oil reserve in the world, spanning an area larger than France. It holds between 60-140 billion barrels of reserves.
Even at the low end, this is almost 3 times the oil in place in US shale fields. Similarly in Argentina, the Neuquén basin is often considered to have the greatest shale oil potential outside North America due to its favorable geology in the vast Vaca Muertaand smaller Agrio formations.
Source: BofAML