All the world’s extra oil supply is likely to come from expensive and environmentally damaging unconventional sources within 15 years, according to a detailed study by oil consultants, Wood Mackenzie.
They have calculated that the world holds 3,600bn barrels of unconventional oil and gas reserves in Canadian oil sands and Venezuela’s Orinoco tar belt that needs a lot of energy to extract.
So far only 8 per cent of that has begun to be developed. However only 15 per cent of the 3,600bn is heavy and extra-heavy oil, with the rest being even more challenging and more energy intensive to produce.
The study makes clear the shift could come sooner than many people in the industry had expected, as major conventional oil fields decline. “It becomes unclear beyond 2020 that conventional oil will be able to meet any of the demand growth,” Wood Mackenzie said. The report added that natural gas products such as liquids and condensate would also become important sources of growth.
The increasing reliance on unconventional oil will require a substantial reshaping of the oil industry, notes the Financial Times. Shell, Total, Exxon and Chevron, are all investing heavily in Canada and Venezuela. Others – including Chinese energy groups – are looking at the possibility of extracting heavy oil from Madagascar.