12
This projection is illustrative only and is designed to show what might happen, assuming no additional new production beyond what was previously discussed occurs. Yet production is more than likely to come online with the appropriate price signals. Previously deferred and delayed projects could be developed, but many will require long development lead times. Therefore, in the short term, only two potential material sources for responsive production growth likely exist: US tight oil, and possibly OPEC. Although OPEC’s true spare capacity remains uncertain.
US tight oil producers stand ready and anxious to strike. They have proven in the past to have an ability to generate growth quickly, they have become ultra-efficient, and they are now able to operate at lower breakeven prices. Yet, there is the question about the long-term impact of the current market downturn on tight oil’s ability to bounce back quickly. They will be operating with “bloodied” balance sheets, reduced headcount, a lean service industry, and lenders that will likely be more cautious with their lending practices.
Figure 9. Total liquids supply/demand forecast90 91 92 93 94 95 96 97 98 99 2015 2016 2017 2018 2019 2020 MMb/d Source: Deloitte MarketPoint AnalysisTotal Liquids ProductionDemandStorage Drawdown