(EnergyAsia, March 18 2014, Tuesday) —- Consultant Douglas-Westwood (DW) doesn’t think the booming US shale sector will threaten deepwater exploration and production efforts by flooding the markets with surplus oil.
While many investment banks and government agencies have cast surging shale oil production as a threat to companies focusing on deepwater reserves, the UK firm says both sources of supply are needed to meet the world’s surging energy demand.
“We have contended that the world is short of oil, and this shortage, rather than changes in habits or demographics, is driving decreasing oil consumption in the advanced countries,” said DW managing director Steven Kopits.
If the oil supply increases, he said the overhang will be quickly absorbed. In January, US oil demand reached 20 million b/d, up one million b/d or 5.3% over the same period last year.
Oil demand in both the advanced and emerging economies have been responding to prices: rising when prices dipped and muted when they rose.
But will it be enough to offset supply growth?
According to Mr Kopits, US shale and Canadian production rose sharply by a total of 1.9 million b/d late last year, and are expected to continue rising this year.
Deepwater players need not worry, he said, as “any excess supply will rapidly find a home, with prices returning to recent levels in a few months. Shales are no threat to deepwater.”