Maugeri: IEA's outlook for US oil output late, maybe low

The author of a study projecting a 17 million b/d increase in global oil production by 2020 has criticized a recent forecast by the International Energy Agency that the US will become the world’s top oil producer by 2020 (OGJ Online, Nov. 13, 2012).

The IEA forecast, says Leonardo Maugeri, a former Eni SPA executive who’s now a research fellow at the Harvard Kennedy School's Belfer Center for Science and International Affairs, came late and might underestimate US production.

In its World Energy Outlook 2012, IEA earlier this month projected that the US will produce 11.1 million b/d of oil and natural gas liquids by 2020, compared with slightly more than 8 million b/d at present.

Maugeri’s June report estimated US production in 2020 at 11.6 million b/d (OGJ Online, June 26, 2012). That rate didn’t include biofuels, which could raise production in 2020 to more than 13 million b/d, Maugeri points out in a note distributed on Nov. 20.

“The additional studies that I am carrying out on more than 2,500 tight-oil and shale-oil wells in the United States lead me to believe that American production could be even higher by 2020,” he says.

The Saudi comparison

Maugeri further questions IEA’s prediction that the US will outproduce Saudi Arabia about 2020, saying the agency lowered its expectation for Saudi output that year without pointing out that the kingdom maintains unused production capacity of 1.5-2 million b/d.

“In other words, Saudi production capacity would still be higher than that of the United States, but probably the Saudis will not exploit it fully, in order to support oil prices (as they have done throughout their history),” Maugeri says.

The analyst further says IEA’s projections “do not seem to take into account the oil boom going on outside North America.” He says IEA only a month ago recognized that Iraqi production could exceed 6 million b/d by 2020—a rate he thinks might be low. And it “seems too cautious” about effects of investments and new production technologies.

“The truth is that we are entering an era of oil abundance, which in and of itself is not necessarily a good thing,” Maugeri says, citing environmental and climate effects.

“Even though oil is not about to become scarce, we need to focus as urgently as ever on energy efficiency policies that will put a cap on consumption,” he says. “Indeed, a season of oil abundance could lead to a significant drop in prices, which in its turn could cause worldwide oil consumption to bounce back. Realistically, this is what we must avoid.”