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, according to a report by PwC.

Shale oil production could surge to 14 million barrels per day, or as much as 12 per cent of total oil output from around 1 per cent now, as it expands from its US base over the next two decades, the accounting firm said in a report.

That could lift global gross domestic product by between 2.3 per cent and 3.7 per cent 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,” said John Hawksworth, chief economist at PwC and co-author of the report.

Bigger flows of shale oil would not increase overall consumption substantially, because demand is not heavily dependent on price, but it would cut the cost of fuel, said Adam Lyons, director of PwC’s oil and gas strategy team.

“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 oil agencies – the US Energy Information Administration (EIA) and the 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.

The report said if the Organisation of Petroleum Exporting Countries (Opec) cuts production in response to the extra supply, oil prices would fall to around $100 per barrel in today’s money by 2035. If Opec does not cut production oil could fall to around $83 per barrel in today’s money by 2035, PwC estimated. Brent crude oil is currently trading at about $119 per barrel. – (Reuters)