London (Platts)--14Feb2013/600 am EST/1100 GMT

Global shale oil production could reach 14 million b/d by 2035, 12% of the world's total oil supply, accountants PwC said in a new report.

"We estimate that this increase could reduce oil prices in 2035 by around 25%-40% ($83-$100/barrel in real terms) relative to the current baseline EIA projection of $133/barrel in 2035, which assumes low levels of shale oil production," PwC said, referring to the US Energy Information Administration's long-term outlook.

PwC said in its report this week that shale or light tight oil was rapidly emerging as a significant and relatively low cost new source of unconventional oil in the United States.

It said shale development would revolutionize global energy markets and provide greater long-term energy security at lower cost for many countries.

But the benefits of lower oil prices will vary significantly, Pwc said, with big net importers such as India and Japan possibly seeing GDP boosts of 4%-7% by 2035 while the US, China, the eurozone area and the UK might gain by 2%-5% of GDP.

In contrast, major oil exporters such as Russia and the Middle East could see their trade balances worsen by around 4%-10% of GDP in the long run if they fail to develop their own shale oil resources, PwC said.

Global shale development could influence the dynamics of geopolitics as it increases energy independence for many countries and reduces the influence of OPEC, PwC said.

Oil producers "will have carefully to assess their current portfolios and planned projects against lower oil price scenarios" while "national and international oil producers will also need to review their business models and skills in light of the very different demands of producing shale oil onshore rather than developing complex 'frontier' projects on which most operations and new investment is currently focused," PwC said.

The report said the potential environmental consequences of increased shale oil production were complex and that appropriate regulation would be needed to meet local and national environmental concerns.

Shale oil development could also have perverse effects on attempts to cut carbon emissions by making alternative lower carbon transport fuels less attractive.

But the report also said shale oil might displace production from higher cost and more environmentally sensitive areas such as the Arctic and Canadian tar sands.

--Margaret McQuaile, margaret_mcquaile@platts.com
--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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