GLOBAL production of shale oil could boost the UK economy by £50bn by 2035, analysis from PricewaterhouseCoopers reveals today.
Shale oil, much like shale gas, is a hydrocarbon produced through fracking, and resources have been found worldwide.
Production of shale oil – also called “tight” oil – has the potential to reach up to 14m barrels of oil a day by 2035, which could push global oil prices down by up to 40 per cent over the period thanks to the extra supply, according to PwC’s shale oil report.
In this scenario, the resource has the potential to revolutionise the UK economy, and the development of shale oil could see UK GDP increase by between two to 3.3 per cent by 2035, equalling a rise of around £500 to £800 per person.
On a global scale, GDP could rise by around 2.3 to 3.7 per cent by 2035, or up to $2.7 trillion (£1.7 trillion) at today’s values.
The UK – which has a big presence in the oilfields services industry in the North Sea – is already known to have significant shale gas resources, and this could be a good indicator of the potential for tight oil, PwC suggests.
By exploiting this natural resource, the UK can contribute to investment, employment, economic growth and energy independence, and lower oil prices mean the UK can become a net oil importer over time, PwC says.
PwC’s report suggests that shale oil has the potential to spread away from the US – where 553,000 barrels were produced in 2011, up from 110,000 barrels in 2004 – and increase to almost 12 per cent of the world’s total oil supply by 2035.
“Lower global oil prices due to increased shale oil supply could have a major impact on the future evolution of the world economy by allowing more output to be produced at the same cost,” John Hawksworth, chief economist at PwC and co-author of the report, said yesterday.
“For the UK alone, the benefit of lower than expected oil prices could be around £30bn to £50bn at today’s values.”