Tight oil and shale gas are changing the world's energy balance
Tight oil is not a new resource, but its use had been held back until recently by expensive production methods. Technological developments and high oil prices have changed all this, however, and production of both tight oil and shale gas has grown significantly in the last few years, particularly in the US.
US-based refiners are benefiting the most from this development, as they are now able to use lower-cost tight oil as a feedstock rather than imported crude. The use of shale gas is also reducing the energy costs of US refiners and enhancing their competitiveness compared to other companies. A number of other countries, in addition to the US, have extensive tight oil reserves, such as China, Russia, South America, and Europe.
Debate on the production of tight oil and shale gas tends to focus on the environmental sustainability of these operations. Sustainable production calls for all risks to be assessed and managed carefully. Although tight oil is currently mainly produced in North America, the economic impact of its use is being felt worldwide. The US could well soon become self-sufficient in energy thanks to tight oil, which will reduce the pressure on crude oil prices and could also impact the traditional price differential between different crude qualities. In the event that the volumes of petroleum products refined in North America exceed local needs, increasing amounts of these products could find their way on to other markets, including Europe.
What does this mean for Neste Oil?
Neste Oil is monitoring the impact these developments are having on product prices, such as gasoline and diesel prices, and on demand. Developments in the crude oil market are also being monitored. Increased operational flexibility is a priority for Neste Oil to enable the use of different types of crude at its refineries.