World to need 2OM barrels of oil a day by 2020: Halliburton

NEW YORK (AA) – The world will need 20 million barrels of oil every day to meet rising demand in the face of lower crude production, the president of oilfields services giant Halliburton said Wednesday.

Regarding low oil prices and the hurdles in the global oil industry, Jeff Miller said capital expenditures are reduced, asset sales have increased and the market has "fundamentally found the bottom" during an address at the Barclays CEO Energy-Power Conference in New York.

When expenditure declines due to low oil prices, there is less investment for oil companies to produce crude. That eventually leads to a reduction in total output over time resulting in less global supply for future.

Miller warned there would be 14 million barrels per day (mbpd) of supply shortage by 2020 because of a starvation in capital expenditure. This will be coupled by continued increase in global demand, which is expected to rise by 1 to 1.5 percent per year, reaching 6 mbpd by 2020, he said.

"This adds up to 20 mbpd of [supply-demand] gap by 2020," he stressed.

Global oil demand was 95.6 mbpd in the second quarter, while world oil production was 97 mbpd in July, according to the International Energy Agency's report last month.

Miller did not comment on what oil prices would be when the global oil market reaches that gap between supply and demand, but he argued that North American oil will be the first to fill this gap.

"I expect that when we do see the supply shock and the race to fill the demand, the fastest incremental barrel of oil to the market wins -- and that barrel is the North America unconventional oil," he said.

The president noted that unconventional oil, extracted by using hydraulic fracturing, also known as fracking, is the fastest method to fill the gap, and is also "the shortest cycle barrel" -- the time span between recovery to the market.

Although unconventional oil production in the U.S. was hit hard by low oil prices, Miller noted the "efficiency gains and lower costs" of the method. Unconventional output is expected to "lead the recovery in the market,” he added.