for Shale Oil Production
Shale executives have repeatedly proclaimed their commitment to capital discipline, promising not to return to profligate spending in pursuit of growth at all costs. But output is growing sharply, poised to reach 12 Mbd in 2019.
Although they have been caught off guard by U.S. growth, OPEC members and their non-OPEC partners have successfully regrouped and will likely be well positioned if fundamentals eventually tighten even more.
Total capital and exploration spending on global oil and gas will likely bottom out in 2018, and investment may not recover to levels seen before the 2014 market downturn until the mid-2020s.
In the shale patch, rig productivity is falling, companies are no longer making headway on drilling times, and cash flow continues to disappoint investors.
Although oil would surpass $200 per barrel under its high-price scenario, the EIA sees little effect in curbing demand growth.
Some producers are turning more toward conventional plays, in particular older oil fields that can be tapped with new technology and provide quicker paybacks and more predictable long-term returns.
After seeing massive growth so far this decade, natural gas liquids (NGLs) are expected to rise by about 1.2 million barrels in the next five years. Despite the increase in NGLs, a key source of supply for petchems, a global oil supply gap could still form early next decade.
Small independent shale producers are dealing with a the possibility of another oil price plunge with aggressive hedging, a development that should allow output to grow.
The OPEC commission would examine whether the cartel’s behavior is designed to disadvantage U.S. oil producers and secure market power through anti-competitive behavior.
While this past weekend’s earthquake in Oklahoma will not likely bring drilling to a halt, it could usher in a new era of heightened oversight on fracking in a state that has seen increasing investment from shale companies in recent years.