* To reduce need for costly Arctic drilling, tar sands
* India and Japan to see greatest benefits
* Oil could fall to around $83/bbl by 2035 in real terms
By Simon Falush
LONDON, Feb 14 Worldwide shale oil production
could add $2.7 trillion to the global economy annually by 2035
by slashing the price of crude by as much as $50 a barrel, PwC
said on Thursday.
Shale oil production could surge to 14 million barrels per
day, or as much as 12 percent of total oil output from around 1
percent now, as it expands from its U.S. base over the next two
decades, the world's largest accounting firm said in a report.
That could lift global gross domestic product by between 2.3
percent and 3.7 percent per year by 2035, according to the
report, "Shale oil: the next energy revolution".
"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.
Bigger flows of shale oil will not increase overall
consumption substantially, because demand is not heavily
dependent on price, but it will cut the cost of fuel, Adam
Lyons, director of PwC's oil and gas strategy team, said.
"One effect will be to cut the need for expensive,
environmentally destructive extraction techniques like the
Arctic and tar sands," he added.
The rapid growth in shale oil has not been factored into
price projections by the two major international oil agencies -
the U.S. Energy Information Administration (EIA) and Paris-based
International Energy Agency, the report said.
Current global oil demand amounts to 80-90 million barrels
per day (bpd), and the agencies estimate it will increase to
around 110 million bpd by 2035.
"Their projections ... are arguably conservative as they are
based only on resources about which there is already a high
degree of certainty," the report said.
"Past experience of shale oil and shale gas suggests that
these resource estimates are likely to be revised upwards
significantly over time."
If the Organization of Petroleum Exporting Countries cuts
production in response to the extra supply, oil prices will fall
to around $100 per barrel in today's money by 2035, the report
If OPEC does not cut production, oil could fall to around
$83 per barrel in today's money by 2035, PwC estimated, or $50
less than the EIA's 2035 real-terms forecast price of $133.
Brent crude oil is currently trading around $119 per
Lower oil prices will feed into stronger GDP growth, adding
$1.7-$2.7 trillion per year, or $230-$370 per person, PwC said.
The level of support will vary greatly, however, from
country to country, it said.
"Large net oil importers such as India and Japan may see
their GDP boosted by around 4 to7 percent by 2035 in our
alternative scenarios, while the U.S., China, Germany and the UK
might gain by around 2 to 5 percent of GDP," Hawksworth said.
(Graphics by Vincent Flasseur; editing by Jane Baird)