Unconventional Oil: Will It Satisfy Future Global Oil Demand?

16 Pages Posted: 8 Mar 2014 Last revised: 11 Mar 2014

See all articles by Ken'ichi Matsumoto

Ken'ichi Matsumoto

Nagasaki University

Vlasios Voudouris

ABM Analytics Ltd

Kostas D. Andriosopoulos

ESCP Europe Business School

Date Written: March 6, 2014

Abstract

The role of unconventional resources (e.g., oil sands and extra-heavy oil) is anticipated to increase in the global oil market. Although we are facing a scarcity of conventional (low cost) oil resources, unconventional oil resources might manage (for a period of time) to supply constraints in terms of meeting expected increases in oil demand. Here, we use the ACEGES (Agent-based Computational Economics of the Global Energy System) model to investigate the potential impact of unconventional oil resources on the future evolution of the oil market on a global scale. The key assumption of the model is that technological improvements will allow unconventional oil production to increase at a rate similar to the rate of production of the conventional oil resources. An important observation from the ACEGES-based simulations is the significant shift of the peak production of oil (both conventional and unconventional) if and only if technological progress will allow upstream extraction rates for unconventional resources, similar to the historic extraction rates of conventional oil. Given the estimated potential of total oil resources, the ACEGES-based scenario suggests that the unconventional oil production may shift the peak year of total oil by 60 years or more, assuming favourable upstream investment plans and a continuous increase in the demand for crude oil products at a reasonable price. However, increased total oil production might not meet the unconstrained (high) growth rates of oil demand.

Keywords: Unconventional oil resources; Scenario analysis; ACEGES model

JEL Classification: C63; Q40; Q41

Suggested Citation

Matsumoto, Ken'ichi and Voudouris, Vlasios and Andriosopoulos, Kostas D., Unconventional Oil: Will It Satisfy Future Global Oil Demand? (March 6, 2014). USAEE Working Paper No. 14-156. Available at SSRN: https://ssrn.com/abstract=2405666 or http://dx.doi.org/10.2139/ssrn.2405666

Ken'ichi Matsumoto (Contact Author)

Nagasaki University ( email )

1-14
Bunkyo-machi
Nagasaki, 8528521
Japan
+81(0)958192735 (Phone)

HOME PAGE: http://www.matsumoto-lab.net/

Vlasios Voudouris

ABM Analytics Ltd ( email )

Suite 17 125
145-157 St John Street
London, EC1V 4PW
United Kingdom

HOME PAGE: http://www.abm-analytics.com/people.php

Kostas D. Andriosopoulos

ESCP Europe Business School ( email )

527 Finchley Road
Hampstead
London, London NW3 7BG
Great Britain
02074438809 (Phone)

HOME PAGE: http://www.escpeurope.eu/nc/faculte-recherche/corps-professoral-escp-europe/professor/name/andriosop

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