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2023

Unconventional Oil Market

Unconventional Oil Market Size, Share, Competitive Landscape and Trend Analysis Report by Type, by Extraction Method, by Application : Global Opportunity Analysis and Industry Forecast, 2023-2032

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Author's: Marpu Vinod | Eswara Prasad
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Unconventional Oil Market Research, 2032

The global unconventional oil market was valued at $666.0 billion in 2022, and is projected to reach $940.3 billion by 2032, growing at a CAGR of 3.6% from 2023 to 2032.

Unconventional Oil Market

Unconventional oil refers to oil resources that are extracted using methods and techniques which are distinct from the conventional drilling production methods used for traditional oil reservoirs. Shale oil is categorized as unconventional as it is trapped within shale rock formations and requires hydraulic fracturing technique. These techniques are different from the conventional vertical drilling utilized to extract oil from traditional reservoirs. Shale crude oil production has become a significant part of the global oil supply in the past few years, and it is classified as one of the unconventional sources of oil due to the distinctive methods adopted in its extraction. 

In 2021, 79% of U.S. primary energy consumption came from fossil fuels. The geologic locations and accessibility of conventional and unconventional fossil fuels vary; conventional fuels are frequently found in distinct, easily accessible reservoirs, whereas unconventional fuels are found in porous spaces throughout a broad geologic formation and require sophisticated extraction techniques. If unconventional oil resources (oil shale, oil sands, extra heavy oil, and natural bitumen) are taken into account then the global oil reserves quadruple current conventional reserves.

Tight oil, or shale oil, is found in impermeable rocks and is often extracted concurrently with natural gas. In addition, tight oil production has expanded significantly. In 2021, 65% (7.2 million barrels per day) of crude oil production in the U.S. came from tight oil. In 2021, the top tight oil producing states were Texas, New Mexico, North Dakota, Alaska, and Colorado. It is estimated that the U.S. has 195 billion barrels of technically recoverable tight oil. 

The price of crude oil peaked in 2008 at $145.31 per barrel, making unconventional fossil fuels more cost-competitive. However, the cost of crude oil briefly dropped to zero in 2020 since 2015. The Energy Policy Act of 2005 includes provisions to promote U.S. oil sands, oil shale, and unconventional natural gas development. Oil sands, i.e., “tar sands” or “natural bitumen,” are a combination of sand (83%), bitumen (10%), water (4%), and clay (3%). For instance, Canada has 73% of global estimated oil sands, approximately 2.4 trillion barrels (bbl) of oil. The U.S. has 1.6% of global oil sands resources; however, 62% of U.S. crude oil imports came from Canada in 2020, and 64% of Canadian production comes from oil sands.

Moreover, oil sands are a significant component of the unconventional oil industry due to their enormous reserves, sensitivity to oil prices, long-term investment requirements, concerns about the environment, and transportation difficulties. The exploration, extraction, and production of oil sands are shaped by a complex interplay of economic, ecological, and geopolitical variables that can impact the global unconventional‐¯oil market. 

The petrochemical industry is anticipated to grow significantly throughout the projected period as a result of rising petrochemical product usage, the adoption of novel techniques such as direct crude cracking, and rising investments in the industry. Shale oil consumption is expected to increase as a result of expansion in the petrochemical sector, thereby aiding the unconventional oil market growth. 

As shale oil becomes more economically viable, it can expand its presence in the global unconventional oil market, potentially leading to an increase in overall unconventional oil production. At a global level, there are enough developed and under-development reserves to accommodate an accelerated phase out of all unconventional oil types: Oil sands and extra-heavy oil, Arctic oil, ultra-deepwater oil, and shale oil. According to International Energy Emission (IEA), unconventional oil types represent an estimated 19% of total underdevelopment reserves, or 183 billion bbl. 

Oil sands production almost exclusively occurs in Canada, representing 65% of domestic output. Likewise, shale oil developed at industrial scales, in the U.S. and also represents 65% of the country’s oil production. Over 90% of global ultra-deepwater oil is in the U.S. Gulf of Mexico and offshore Brazil, plays a larger role in domestic supply for Brazil. Extra-heavy oil makes up around 20% of oil production in Mexico, and 45% in Venezuela. 

The rapid expansion of oil and gas extraction using hydraulic fracturing both in rural and more densely populated areas has raised concerns about its potential environmental and health impacts. These concerns have focused primarily on potential impacts to groundwater and surface water quality, public and private water supplies, and air quality. States broadly regulate oil and gas exploration and production on non-federal lands. State laws and regulations governing unconventional oil and natural gas development have been evolving across the states in response to changes in production practices, largely in response to the use of high-volume hydraulic fracturing in combination with directional drilling. However, state regulations vary considerably, leading to calls for more federal regulation of unconventional oil and natural gas extraction activities. 

Unconventional oil resources have great significance for the improvement of the current situation to meet growing energy demand. In recent years, rise in oil production in Saudi Arabia and Russia, the decline in oil prices, the exploitation of unconventional oil resources (represented by American shale oil and Canadian oil sands bitumen) have been severely impacted, resulting in the decline of the growth rate of heavy oil and asphalt production. Nevertheless, heavy oil and bitumen will still be extremely important unconventional oil resources. It is estimated that the daily output of oil sands bitumen in Canada will reach 4.5×106 barrels in 2040, and the production of heavy oil in Venezuela will also reach 1.2×106 barrels. 

It has been estimated that 60% of unconventional drilling rigs and pressure machinery is currently located in North America, while 25% is in China. In terms of cost, horizontal drilling and hydraulic fracturing technologies have made tremendous progress in the last five years, making tight oil commercially feasible. The relative pace of technology development for the exploration and production of tight oil versus other unconventional energy sources will also determine future volumes of production. 

Unconventional oil industry serves a variety of purposes and is essential to meet energy needs and promote economic growth. Shale oil is a type of an unconventional oil that is converted into the gasoline and diesel fuels used to power cars, trucks, and buses. For instance, the Bakken Shale in North Dakota and Montana has made a considerable contribution to the nation's supplies of gasoline and diesel. A variety of industrial processes, notably the production of petrochemicals, plastics, and synthetic materials, utilize unconventional oil as a feedstock.

For instance, the oil sands in Canada are a source of feedstock for the petrochemical industry. Unconventional oil has diverse applications throughout the energy and industrial sectors, that contribute to transportation, electricity generation, and industrial processes. These applications assist in addressing energy demands, propel economic growth, and foster technological advancements in the energy industry. 

Through exploration, innovation, and financial investment in technology, numerous oil and gas corporations have taken steps to increase the market for unconventional oil. For instance, ExxonMobil has been forefront in the exploration and extraction of tight oil resources, including shale oil. They have made significant investments in the Permian Basin in West Texas, one of the largest shale oil formations in the world. Moreover, Chevron has launched a number of measures to increase the production of unconventional oil, including the creation of Canadian oil sands. Chevron's participation in the Athabasca Oil Sands Project in Alberta, in which they employed steam-assisted gravity drainage (SAGD) to extract and upgrade bitumen from the oil sands. ConocoPhillips is pursuing unconventional oil extraction via shale development as well as advanced drilling techniques. PetroChina, one of China's largest oil companies, has been proactively exploring and developing heavy oil resources. It makes investments in the Fuyu oil field in China, employing enhanced oil recovery (EOR) methodologies to extract heavy oil more efficiently. 

The estimation of unconventional oil resource potential is highly uncertain leading to significant revisions in both upward and downward directions. For instance, the United States Geological Survey (USGS) recently revised their assessment of the Permian shale play, revealing an additional 20 billion barrels of technically recoverable tight crude oil resources compared to earlier estimates. This uncertainty is particularly evident in regions like Argentina, Canada, Russia, and Mexico, where substantial growth in unconventional oil production is projected. Other countries such as Australia, China, and the UAE witness significant increases in unconventional oil prospects. By 2040, it is anticipated that more than 3.5 million barrels per day (mb/d) of tight oil production will come from areas outside the U.S. These revisions and growth projections highlight the dynamic and evolving nature of unconventional oil resources globally. 

Furthermore, GHGs (greenhouse gases) released from unconventional oil are higher than conventional oil which hampered the unconventional oil market. In April 2012, the Environmental Protection Agency, and the Department of the Interior’s U.S. Geological Survey signed a related memorandum of agreement initiating a multi-agency collaboration on unconventional oil & gas research. The objective of this collaborative effort is to better understand and address the potential environmental, health, and safety impacts of natural gas development through hydraulic fracturing.  

Recent innovation in drilling and extraction technologies can lead to more efficient and cost-effective methods for extracting unconventional oil resources. This includes improved hydraulic fracturing techniques, drilling automation, and enhanced reservoir modelling. Ongoing exploration and discovery of new unconventional oil reserves in various regions around the world can significantly expand the market. As technology improves, it becomes more feasible to tap into previously uneconomical resources. Integrating carbon capture and utilization technologies into unconventional oil production can reduce greenhouse gas emissions and align global efforts to combat climate change. As the world transitions to cleaner energy sources, unconventional oil help to meet energy demand as renewable energy infrastructure is being expanded. This may lead to strategic partnerships between conventional and unconventional oil producers. 

Several countries develop their unconventional oil resources to reduce energy import dependence and boost economic growth. This includes regions such as Latin America, Africa, and parts of Europe that have untapped unconventional reserves. Saudi Arabia has been investing in shale and tight oil exploration to diversify its energy sources. The country has initiated drilling test wells and pilot projects in areas like the Ghawar field. South Africa has been considering the exploration of shale gas reserves in the Karoo Basin. The growth of the unconventional oil market in the LAMEA region is influenced by various factors, such as global oil prices, technological advancements, environmental considerations, and market dynamics. These initiatives represent efforts to tap into unconventional oil resources and leverage them to meet energy demands, reduce reliance on conventional reserves, and support economic development. 

The unconventional oil market scope is segmented on the basis of type, extraction method, application, and region. On the basis of type, it is classified into heavy oil, extra heavy oil, bitumen, and oil shale. As per extraction method, the market is bifurcated into traditional drilling techniques and advanced extraction techniques.‐¯‐¯Depending on application, it is divided into oil and gas and lubricant. Region wise, the market is studied across North America, Europe, Asia-Pacific, and LAMEA. Presently, Asia-Pacific accounts for the largest share of the market, followed by Europe and North America. The major companies profiled in this report include Canadian Natural, Chevron, Continental Resources Inc., ConocoPhillips, ExxonMobil Corporation, Imperial Oil Limited, PDVSA- Petroleos de Venezuela, S.A., Petróleo Brasileiro S.A. – Petrobras, Sasol Limited, and Suncor Energy Inc.

Unconventional Oil Market by Type

Based on type, the oil shale segment held the highest market share in 2022, accounting for more than one-third of the global market revenue, and is estimated to maintain its leadership status throughout the unconventional oil market forecast period. Oil shale is used as a source of energy through various methods, such as surface retorting, in-situ conversion, or underground mining. These processes yield synthetic crude oil, shale gas, and other hydrocarbon products, which can be further refined into various fuels like gasoline, diesel, and jet fuel.

Unconventional Oil Market by Extraction Method

Based on extraction method, advanced extraction techniques segment held the highest market share in 2022, accounting for nearly three-fourths of the global unconventional oil market revenue, and is estimated to maintain its leadership status throughout the forecast period. It can be adjusted over time to respond to changes in emission reduction targets, technological advancements, and economic conditions.

Unconventional Oil Market by Application

Based on the application, the oil and gas held the highest market share in 2022, accounting for nearly four- fifths of the global unconventional oil market size in terms of revenue, and are estimated to maintain their leadership status throughout the forecast period. The transportation industry heavily relies on petroleum-based fuels such as gasoline and diesel. These fuels are derived from crude oil and are used to power cars, trucks, ships, and airplanes. Oil and gas are used as raw materials to produce a wide range of petrochemical products, such as plastics, chemicals, and synthetic materials.

Unconventional Oil Market by Region

Based on region, North America held the highest market share in terms of revenue in 2022, accounting for more than three-fourths of the global unconventional oil market share in terms revenue, and is likely to dominate the market during the forecast period. The Asia-Pacific region presents significant growth potential in unconventional oil. Emerging markets, such as India, China, and Southeast Asian countries, have witnessed rapid industrial growth which will lead to increased demand for unconventional oil.

Key Benefits For Stakeholders

  • This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the unconventional oil market analysis from 2022 to 2032 to identify the prevailing unconventional oil market opportunities.
  • The market research is offered along with information related to key drivers, restraints, and opportunities.
  • Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
  • In-depth analysis of the unconventional oil market segmentation assists to determine the prevailing market opportunities.
  • Major countries in each region are mapped according to their revenue contribution to the global market.
  • Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
  • The report includes the analysis of the regional as well as global unconventional oil market trends, key players, market segments, application areas, and market growth strategies.

Unconventional Oil Market Report Highlights

Aspects Details
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Market Size By 2032

USD 940.3 billion

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Growth Rate

CAGR of 3.6%

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Forecast period

2022 - 2032

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Report Pages

452

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By Type
  • Extra Heavy Oil
  • Bitumen
  • Oil Shale
  • Heavy Oil
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By Extraction Method
  • Traditional Drilling Techniques
  • Advanced Extraction Techniques
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By Application
  • Oil and gas
  • Lubricants
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By Region
  • North America  (U.S., Canada, Mexico)
  • Europe  (Germany, UK, France, Italy, Spain, Rest of Europe)
  • Asia-Pacific  (China, Japan, India, South Korea, Australia, Rest of Asia-Pacific)
  • LAMEA  (Brazil, Saudi Arabia, South Africa, Rest of LAMEA)
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Key Market Players

Canadian Natural, Suncor Energy Inc., Continental Resources Inc., Chevron, ExxonMobil Corporation, Petróleo Brasileiro S.A. - Petrobras, PDVSA- Petroleos de Venezuela, S.A., ConocoPhillips, Sasol Limited, Imperial Oil Limited

Analyst Review

According to CXO perspective, the global unconventional oil market is expected to witness increased demand during the forecast period due to a rise in demand from the energy sector.? 

Rise in exploration and development of unconventional oil reserves in GCC (Gulf Cooperation Council) countries, especially Saudi Arabia, have the potential to contribute to the growth of the unconventional oil market by diversifying their oil portfolio, enhance market position, ensure energy security, foster economic growth, and strengthen their geopolitical influence. The GCC countries, despite their historical focus on conventional oil reserves, have started exploring unconventional oil (mostly shale/tight oil) reserves. These unconventional reserves are anticipated to be significant in quantity. 

The U.S. Energy Information Administration (EIA) forecasts a substantial increase in domestic crude oil production, with a 20% rise by 2040. Tight oil production is expected to surge with a projected 45% increase between 2018 and 2030. This growth underscores the industry's commitment to tapping unconventional resources. Despite the environmental and energy challenges associated with unconventional oil extraction, U.S. oil production continues to expand. This growth is attributed to increased focus on exploration activities. 

Author Name(s) : Marpu Vinod | Eswara Prasad
Frequently Asked Questions?

Oil and Gas is the leading application of Unconventional Oil Market.

North America is the largest regional market for Unconventional Oil.

ExxonMobil Corporation, Chevron, Imperial Oil Limited, Petro’leo Brasileiro S.A. - Petrobras, and Sasol Limited are the top companies to hold the market share in Unconventional Oil market.

$940.3 billion is the estimated industry size of Unconventional Oil market.

Technological Advancements, Environmental Sustainability, Market Diversification, Resource Assessment, Economic Viability are the upcoming trends of Unconventional Oil Market in the world.

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Unconventional Oil Market

Global Opportunity Analysis and Industry Forecast, 2023-2032