The US shale boom is set to continue, according to the International Energy Agency’s (IEA) World Energy Outlook 2019, with output set to stay higher for longer than previously predicted.
Although the rate of production will slip from the rapid expansion of recent years, the report predicts that the US will account for 85 per cent of the increase in global oil production to 2030, as well as 30 per cent of the increase in gas.
The result of this continuing rush in productivity, which has been backed by $1 trillion in upstream and midstream development, is a fundamental reshaping of global markets and trade flows.
By 2025, total US shale output will surpass oil and gas production from Russia. By 2030, the combined production share of Opec and Russia will fall to 47 per cent, from 55 per cent in the mid-2000s.
Dr Fatih Birol, executive director of the IEA, said that the findings “highlight that rapid change in the energy system is possible when an initial push to develop new technologies is complemented by strong market incentives and large-scale investment.”
He added: “The effects have been striking, with US shale now acting as a strong counterweight to efforts to manage oil markets.”
The report, which was released this morning, finds that on current government policies, energy demand will rise 1.3 per cent by 2040, resulting in a strong increase in emissions.
Dr Birol called on governments to come together to tackle the situation, saying:
“The world urgently needs to put a laser-like focus on bringing down global emissions. This calls for a grand coalition encompassing governments, investors, companies and everyone else who is committed to tackling climate change.”
The analysis highlights the importance of Africa’s development for global energy markets. By 2040, the continent will have a population of 2bn, and will see the urbanisation of 200m people, twice that of China during its economic boom.
Africa has 40 per cent of the world’s solar potential, but on current forecasts renewables growth will fall far behind that of traditional fuels like oil and gas.
The World Energy Outlook, the IEA’s flagship annual publication, maps out different scenarios for the coming decades based on policy and investment decisions.
In October the IEA released part of the report, which found that offshore wind could become a $1 trillion (£779bn) industry by 2040.
Although electricity generated through offshore wind farms currently accounts for 0.3 per cent of the world’s power, a combination of falling costs and supportive government policies will see capacity increase 15-fold over the next two decades.
Main image credit: Getty