Expansion of North America Shale Oil Market Projected to be Supported by Significant Investment

Energy requirement for U.S. in increasing and new environmental reforms are limiting the use of coal as an energy source. This has increased energy dependency on petroleum and natural gas. In 2015, there was about 3% rise in energy fulfilled by petroleum based products in USA. Efficient working of shale oil producers and growing world energy demand are major drivers for shale oil market. Moreover U.S. oil imports are causing cash flow towards Middle East. Government are developing reforms to help shale oil and gas producers within the region. Technological advancements in drilling techniques are increasing the number of recoverable oil reserves.

OPEC is over supplying the oil market and keeping its price low. OPEC produces oil for about $10 per barrel whereas shale oil costs around $25 a barrel. This has caused many smaller shale oil producers to cut down productions. This has created intense price pressure in the international market.

Oil shale contains organic matter which is converted into synthetic oil by pyrolysis and hydrogenation or thermal dissolution. U.S. have the largest proved shale oil reserve followed by Russia. Despite of high production cost and low market price of oil, shale oil market accounted for more than 50% of total oil market in the U.S. in 2015. U.S. is the largest consumer and a major importer of oil. Presently, around 35% of total US energy demands are fulfilled by petroleum products. In the U.S. from Jan 2016- July 2016, total imports of crude oil have increased significantly. To fulfill its growing energy demand, the U.S. is majorly dependent on Canada and OPEC. Canada’s energy demand have been constant but production has increased to meet US oil consumption.

In Nov 2014, OPEC reduced its oil prices and increased its production to discourage shale oil manufacturers of world, this resulted production freeze among shale producers. This caused a major setback for world shale oil market. This also drastically increased the number of drilled out uncompleted wells (DUCs). These reasons forced American oil companies to become innovative and efficient. Now, Oil companies are cutting their production cost, deploying efficient oil rigs and increasing their production. Since July 2016, there has been 20% increase in oil rig counts. Oil producers have also increased their exports to India. These trends are declaring the redemption of U.S. shale oil. Shale oil market is expected to gain momentum from mid-2017.

Reserves: U.S. have significant proved shale oil reserves. Since 2010, there have been a regular increase in proved oil reserves. Presently the largest proved recoverable shale formation is the Monterey play in southern California (USA). The next largest recoverable shale oil plays are in Eagle Ford and Bakken. Green River Formation in Colorado, Wyoming, and Utah, are among the biggest oil shale deposits in the world. But these deposits are not economically recoverable with current technology. In Canada, Bakken (stretches across southern Saskatchewan to Manitoba) and Cardium formation in Alberta are two shale oil plays.

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Market segmentation based on oil producing major shale play- U.S. of America ( Bakken, Eagle Ford, Marcellus, Permian, Utica, Haynesville and Niobrara) and Canada (Bakken and Alberta); Market segmentation based on method of extraction used- Surface method(Ex-situ or conventional method) (Open pit mining and Underground mining) and In-situ method ( Vertical drilling and retorting and Horizontal drilling and retorting); Market segmentation on the based on application industries (Residential sector, Commercial sector, Industrial sector and Transportation sector)

Key Players U.S. : Apache Corporation, Chevron Corporation, ConocoPhillips Co, Continental Resources Inc, Hess Corporation, Koch Industries Inc, Linn Energy, LLC, Marathon Oil Corporation, Murphy Oil Corporation, Newfield Exploration Company, Occidental Petroleum Corporation (Oxy), Pioneer Natural Resources Company, Range Resources Corporation, Shell Oil Company, SM Energy Company, Whiting Petroleum Corporation, WPX Energy, Inc., Denbury Resources Inc, EOG Resources, Devon Energy, ExxonMobil, Chesapeake, Energy, EQT; Key Players Canada : Husky Energy Inc., Imperial Oil Limited, Pacific Exploration and Production, Suncor Energy, Canadian Natural Resources Limited, Syncrude, Cenovus

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