Worldwide shale oil production could add $2.7 trillion to the global economy annually by 2035 by slashing the price of crude by as much as $50 a barrel, PwC said on Thursday.
Shale oil production could surge to 14 million barrels per day, or as much as 12 percent of total oil output from around 1 percent now, as it expands from its U.S. base over the next two decades, the world's largest accounting firm said in a report.
That could lift global gross domestic product by between 2.3 percent and 3.7 percent per year by 2035, according to the report, "Shale oil: the next energy revolution".
"Lower global oil prices due to increased shale oil supply could have a major impact on the future evolution of the world economy by allowing more output to be produced at the same cost," John Hawksworth, chief economist at PwC and co-author of the report, said.
Bigger flows of shale oil will not increase overall consumption substantially, because demand is not heavily dependent on price, but it will cut the cost of fuel, Adam Lyons, director of PwC's oil and gas strategy team, said.
"One effect will be to cut the need for expensive, environmentally destructive extraction techniques like the Arctic and tar sands," he added.
The rapid growth in shale oil has not been factored into price projections by the two major international oil agencies - the U.S. Energy Information Administration (EIA) and Paris-based International Energy Agency, the report said.
Current global oil demand amounts to 80-90 million barrels per day (bpd), and the agencies estimate it will increase to around 110 million bpd by 2035.
"Their projections ... are arguably conservative as they are based only on resources about which there is already a high degree of certainty," the report said.
"Past experience of shale oil and shale gas suggests that these resource estimates are likely to be revised upwards significantly over time."
If the Organization of Petroleum Exporting Countries cuts production in response to the extra supply, oil prices will fall to around $100 per barrel in today's money by 2035, the report said.
If OPEC does not cut production, oil could fall to around $83 per barrel in today's money by 2035, PwC estimated, or $50 less than the EIA's 2035 real-terms forecast price of $133.
Brent crude oil is currently trading around $119 per barrel.
Lower oil prices will feed into stronger GDP growth, adding $1.7-$2.7 trillion per year, or