If oil prices average $40 per barrel, U.S. shale oil production will likely decline by 3 million barrels per day between 2015 and 2020, and even if oil prices reach $60 per barrel, a decline is still imminent, according to the International Energy Agency (IEA).
US shale production is not expected to halt the decline until we reach prices of $70 per barrel over the same period.
If we reach $100 per barrel, according to the agency, we could see a 1.5 million barrel per day increase in U.S. shale oil, or light tight oil.
Speaking at the Platts Global Crude Oil Summit, IEA chief economist Laszlo Varro
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These predictions are more negative than the agency’s earlier World Energy Outlook predictions released in November last year.
"The U.S. oil industry is fighting very hard and I'm really impressed by how hard they fight, but they cannot overcome the laws of gravity. So investment is declining in the U.S. quite significantly," Varro said, as reported by Platts.
He also lauded the U.S. shale boom for introducing supply flexibility into the global equation.
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"So a half-century long trend toward increasing complexity and increasing project size was broken and that led to a very different oil supply which can react to the demand changes much more rapidly," Varro said.
The IEA comments come amid media speculation that Saudi Arabia will continue to maintain high oil production levels, as the new Saudi oil minister, Khalid Al-Falih, vows to stay the course—defending market share against U.S. shale.
By James Burgess of Oilprice.com
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