Shale Oil Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Shale Oil Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The shale oil market is expected to register a CAGR of more than 2% over the period of 2021-2026. Since the beginning of the shale boom, the outbreak of COVID-19 has brought a huge change in the industry in 2007. The pandemic is expected to impede the growth of the market, with most of the risky assets being restructured and many companies either leaving or soon to leave the basins till the increase in oil prices goes above USD 50 per barrel. Factors such as an increase in consumption of oil and rising growth in the oil-dependent industries are expected to drive the market. However, volatility in the oil market with prices going below the shale oil production cost acts as a restraint to the market.

• The petrochemical industry is expected to drive the shale oil market in the forecast period due to its increasing usage of oil as a chemical component rather than an energy provider. Shale oil is a large-scale polluter, and therefore governments all over the world are trying to limit its usage as an energy source by using it to create polymers and plastics.
• New development in the shale oil production technology, like the advancements in horizontal drilling technology, is expected to make the shale oil reservoirs more viable and may provide an opportunity for market players.
• North America is expected to be the largest market in the forecast period due to its large-scale shale oil production in the region. United States is expected to lead shale oil production in the region.

• Many countries have large reserves of shale oil deposits, which may be used to decrease their dependency on imports of oil to suffice the needs of the petrochemical industry in the country. This aids the growth of the shale oil industry in the nation by providing an incentive to invest in shale oil production.
• Moreover, the share of shale oil in transportation and power generation has been reducing due to better and cleaner alternatives replacing it in the market. However, it is the most important chemical in the petrochemical segment, without which synthesizing the required compounds would be much difficult.
• Several world-scale projects are currently following a path of configuring a refinery to produce maximum volumes of chemicals instead of transportation fuels as in a conventional refinery.
• As of 2019, Reliance Industries Ltd (RIL) planned to invest INR 700 Billion for setting up crude-to-chemical projects adjacent to the existing Jamnagar site, an integrated petroleum refinery and petrochemical complex, as part of its oil-to-chemical strategy. It is expected to be among the foremost full crude-to-chemical plant in the world and increase the production of petrochemicals by reducing the generation of petrol and diesel. Large-scale investments like these are expected to increase the demand for shale oil in the forecast period.
• The petrochemical industry is expected to increase significantly in the forecast period due to increasing uses of petrochemical products, the introduction of innovative processes like direct crude cracking, and increasing investments into the sector are expected to grow the market. Growth in the petrochemical industry is expected to increase the consumption of shale oil, thereby aiding the growth of the shale oil market.

• United States, in 2019, was the largest producer of shale oil in the world. Many different countries such as Brazil, Canada, China, and Argentina have tried to emulate the American shale boom but have not been able to succeed. However, large progress has been made in China, but due to the difficulties posed by the unstable reservoirs, shale oil production may only rise slightly in the forecast period.
• The Permian basin is the largest source of shale oil in United States, with Spraberry (TX Permian) field being the most productive shale oil field. In April 2020, the field produced 1.757 million barrels per day, from 1.532 million barrels per day, in April 2019.
• The shale oil production in United States increased, by 13.87%, from 7.956 million barrels per day (mbpd) in 2019 to 6.986 mbpd in 2018. Shale oil production may increase further due to new wells being drilled across the country.
• Canada’s production of shale oil in the country was approximately 335,000 barrels a day in 2018. Multinational companies are expected to invest in the market, and the production is expected to increase in the forecast period.
• Hence, North America is expected to dominate the market due to the overwhelming production of shale on the continent and further increase in the investment in the sector.

The shale oil market is fragmented. Some of the key players in this market are Exxon Mobil Corporation, Chevron Corp., Royal Dutch Shell PLC, Marathon Oil Corporation, and Occidental Petroleum Corporation.

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