Nov 6, 2019

The slowing U.S. shale boom

Photo: ZHENGSHENG/Getty Images

U.S. oil production growth is slowing down — and soon, the industry may slam on the brakes, according to a new analysis and a top industry executive.

Why it matters: It's the latest sign that producers — facing modest prices and investor demands for returns — are repositioning after the boom that has made the U.S. the world's largest oil producer.

  • It's a contrast to 2018 when U.S. production surged by nearly 2 million barrels per day.
  • The slowdown could also bring new challenges for local economies in Texas and elsewhere that are tethered to the industry.

Driving the news: The consultancy IHS Markit sees U.S. oil production growth "essentially flattening out" in 2021 after slowing to 440,000 barrels per day in 2020.

  • Meanwhile the CEO of Pioneer Natural Resources — a big shale producer — told analysts yesterday that the surging Permian Basin will "slow down significantly over the next several years."

What they found: IHS said producers are responding to lower prices that stem from trade wars and weaker than expected demand.They see prices for the U.S. benchmark West Texas Intermediate averaging around $50-per-barrel in 2020 and 2021.

What's next: The consultancy expects "modest growth" to resume in 2022 after flattening in 2021, but not a return to the surge of recent years.

The bottom line: "[T]his is a new era of moderation for shale producers," IHS analyst Raoul LeBlanc said in a statement.“Investors are imposing capital discipline...by pushing down equity prices and pushing up the cost of capital on debt markets," LeBlanc said.

Go deeper: Texas dominates U.S. oil production

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A growing oil industry divide

Deep pumps installed on the Dutch border. Photo: Mohssen Assanimoghaddam/picture alliance via Getty Images

A pair of analyses are laying bare the divide between major oil companies and their smaller peers.

Driving the news: A new Rapidan Energy Group note explores plans by Democratic White House hopefuls to thwart oil-and-gas development on federal lands and waters.

Go deeperArrowNov 7, 2019

OPEC+ to gather as challenges mount

OPEC Secretary General Mohammed Barkindo shakes hands with Russian President Vladimir Putin at the 2019 Russian Energy Week forum. Photo: Alexey Nikolsky/Sputnik/AFP via Getty Images

OPEC and Russia — among other allied producers — will gather in Vienna late this week to decide the future of their supply-limiting deal.

Why it matters: The OPEC+ group is struggling to prop up prices amid growing supplies from the U.S. and elsewhere, as well as rather soft demand and trade conflicts.

Go deeperArrowDec 2, 2019

The U.S. confirms its status as a petro-superpower

Adapted from EIA's outlook; Chart: Axios Visuals 

New data and projections confirm the emergence of the U.S. as a net exporter of crude oil and liquid petroleum products (gasoline, diesel and and more) combined.

Why it matters: The inflection point underscores the growth of the U.S. as a petro-superpower, although we still import millions of barrels of crude oil per day and production growth is slowing.

Go deeperArrowNov 14, 2019