North American tight oil is emerging as the cheapest source of new global oil volumes, second only to the Middle East onshore market, according to Rystad Energy.

The energy analyst said Thursday the cost of supply curve update ranks total recoverable liquid resources by their breakeven price.

“As the majors are struggling to replace conventional liquids, a wealthy source of additional resources is tight oil,” said Rystad’s Espen Erlingsen, head of upstream research.

Tight oil, which in the U.S. onshore is today pulled from shale, sandstone, carbonates, limestone and other resources, has witnessed an “impressive turnaround over the last few years.”

Four years ago, North American onshore oil deposits ranked as the second most expensive resource with an average breakeven of around $68/bbl, according to Rystad’s global liquids cost curve.

However, the average Brent breakeven price for tight oil is estimated at $46/bbl today, only an estimated $4/bbl behind onshore fields in Saudi Arabia and other Middle Eastern countries.

“The North American tight oil industry has changed considerably since 2014, as it has proven to be a competitive supply source in a low price environment,” Erlingsen said. “While costs for tight oil have been reduced, the resource potential has grown considerably over the last four years.”

Rystad estimated that total recoverable resources from North American tight oil has more than tripled since 2014.

“For oil companies struggling to replace conventional resources after years of disappointing exploration results, tight oil simultaneously offers a base for growth, increased flexibility, and attractive returns,” analysts said.

Offshore oil deposits usually require exploration and production (E&P) companies up to 12 years to recover costs, but tight oil may require only take two to four years.

“Tight oil is a short-cycle investment with a relatively brief lead time from the sanctioning of new wells to the start of production,” Erlingsen said. “This gives E&P companies the flexibility to adapt to market conditions and easily change activity levels. In the ever-changing oil price environment, this implies tight oil investment has less uncertainty compared to offshore.”