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CALGARY – Tight oil, the new oil source unlocked by new drilling technologies, is bearing such good results it could quickly compete with Canada’s oil sands as a top secure supply of North American oil.
With companies like Devon Energy Corp., Talisman Energy Inc., Encana Corp. and Exxon Mobil Corp. pushing big spending toward tight oil, analysts are ratcheting up their production forecasts for the supplies, which are largely based in the United States.
“Tight oil is changing the landscape in North America,” Steve Fekete, managing consultant at Purvin & Gertz, said at an oil sands industry conference in Calgary this week.
The international energy consultancy predicts production of tight oil in the United States alone could reach between 1.4 million barrels a day and 2.4 million b/d by 2020 – from about 600,000 b/d today derived in large part from the Bakken field in North Dakota.
Tight oil is a catch-all for oil trapped in shale, carbonate or sand formations recoverable with the type of horizontal drilling/hydraulic fracturing technologies that revolutionized the natural gas side of the business.
The forecast is based on fields already known such as the Bakken, the Eagle Ford in Texas and the Niobrara in Colorado and could be conservative as new finds are made with increased exploration, Mr. Fekete said in an interview. There are deposits of tight oil in Canada too, like Bakken in Saskatchewan, but they are not on the same scale as those in the U.S.
Production from the oil sands is expected to grow at a similar pace, from about 1.5 million b/d today to about three million b/d in 2020.
Tight oil’s promise drew a prediction this week by the investment bank Raymond James that U.S. crude production would increase 38% to 9.1 million b/d by mid-decade, reversing decades of decline. When natural gas liquids are included, the brokerage predicted U.S. production would increase 55% to 12 million b/d by 2015.
Tight oil and the oil sands will compete for resources, people and logistics, Mr. Fekete said. Tight oil from the North Dakota Bakken is already competing with the oil sands for pipeline space, contributing to a supply bottleneck in the U.S. Midwest that is depressing the prices of both.
But tight oil and the oil sands require different processing – tight oil is light, oil from the oil sands is heavy and matched for special refineries in the U.S. Gulf Coast that want to diversify away from similar oil imported from Mexico and Venezuela.
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