U.S. "tight oil" output to double by 2035: EIA

NEW YORK Mon Jun 25, 2012 5:40pm EDT

NEW YORK (Reuters) - The U.S. government published its first official forecast for booming "tight oil" production on Monday, estimating that shale formations such as the Bakken in North Dakota will more than double output in the next two decades.

The projections, one small part of the Energy Information Administration's updated long-term forecasts, shed light on the agency's take on the role of the oil found in low-permeability reservoirs such as shale and chalk formations, the largest new source of U.S. supply since offshore Gulf of Mexico.

U.S. output from eight tight oil prospects covered by the report will more than double to 1.23 million barrels per day by 2035 from 2011 levels, the EIA said, breaking out specific data on tight oil production for the first time in its 2012 Annual Energy Outlook.

In 2012, tight oil output will reach 720,000 bpd, or 12.5 percent of domestic production, it said.

The estimates -- based on a "reference" case, which assumes current technological and demographic trends will continue -- show that total U.S. oil output will reach a peak of 6.7 million bpd in 2020, the highest since 1994. About 18 percent of this will come from tight oil.

The 2020 forecast for total domestic production is unchanged from the draft report the administration released in January.

The EIA expects tight oil to account for 20.5 percent of the 5.99 million bpd of the total it expects will be produced in the United States. The 2035 figure is lower than earlier estimates.

Tight oil output will reach as high as 1.33 million bpd in 2029 and then decline in the six years to 2035, according to the projection.

The report considers output from the Bakken, Eagle Ford in Texas, the tight oil plays in the Permian Basin of Texas and New Mexico and the Monterey shale in California, among others.

SHALE REVOLUTION

A combination of horizontal drilling and hydraulic fracturing technologies have unlocked massive shale reserves in the United States and upended oil markets by adding a surplus that is now flooding the key storage hub in Cushing, Oklahoma.

Output from the Bakken and Three Forks shale in North Dakota, the most prolific tight oil prospect in the U.S., reached 545,000 bpd in April, according to data from the North Dakota Industrial Commission.

Eagle Ford output is on its way to match Bakken's, after output reached 520,000 bpd in April, according to research firm Bentek Energy.

Energy companies have also set their sights on burgeoning oil plays like the Utica shale in Ohio, whose oil output is yet unknown. The EIA's latest report does not include projected Utica production.

The "Reference" estimate is the second-lowest among four case scenarios the EIA considered in the report.

The largest estimate projects tight oil output will grow to 2.24 million bpd in 2020 and 2.8 million bpd in 2035, assuming an average eight wells will be drilled per each square mile of tight oil acreage.

(Reporting by Selam Gebrekidan; Editing by Dale Hudson)

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