Oil production capacity is surging in the United States and several other countries at such a fast pace that global capacity is likely to grow by nearly 20 percent by 2020, an event that could prompt a plunge or even a collapse in oil prices, according to a new study by a researcher at the Harvard Kennedy School.
Leonardo Maugeri, a former oil industry executive and current fellow in the Geopolitics of Energy Project in the Harvard Kennedy School’s Belfer Center, based his findings on an original field-by-field analysis of the world’s major oil formations and exploration projects. The study projects that output should grow from the current 93 million barrels per day (BPD) to 110 million BPD by 2020, the biggest jump in any decade since the 1980s. This increase represents less than 40 percent of the new oil production under development globally, with more than 60 percent of the new production likely to reach the market after 2020.
Maugeri attributes the expected growth in oil output largely to a combination of high oil prices and new technologies, such as hydraulic fracturing, which are opening up vast new areas and allowing extraction of “unconventional” oil. His analysis finds that the gross additional production from current exploration and development projects in the world could produce an additional 49 million BPD by 2020, an increase equivalent to more than half the world’s current 93 million BPD. Read more information.