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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Russia Predicts The Death Of U.S. Shale

U.S. shale production growth is slowing down, and America’s shale output will likely peak in the next few years, Russia’s Energy Minister Alexander Novak said on Tuesday.

We see that there is slowing activity in U.S. shale, and despite the fact that production continues to grow, growth is weaker than in previous years, Novak told reporters in Sochi today.

The number of drilling rigs in the United States dropped by 160 in a year, Novak noted.

The U.S. oil rig count continued to drop in the latest reporting week, according to Baker Hughes data. The total oil and gas rig count now stands at 851, or 216 down from this time last year. The total number of active oil rigs in the United States increased by 1 last week, reaching 713—this is down by 160 rigs year on year.

“This is clearly a trend,” Novak said, adding that at current oil prices, U.S. shale production will not grow as fast as it did in previous years.

Many factors, including financing, will determine the pace of American shale production, according to Russia’s energy minister.

“In the near future, if forecasts turn out correct, we will see a plateau in production,” Novak said. Related: Oilfield Services Face Crisis As Shale Slowdown Worsens

Growing U.S. oil production, particularly from shale formations, has been keeping a lid on oil prices over the past two years and has been frustrating the efforts of Russia and OPEC to rebalance the oil market with their production cut deal.

Yet, analysts concur that U.S. oil production is set for slower growth going forward, even if the U.S. continues to set production records.

Goldman Sachs has just cut its estimate for U.S. shale growth next year. The investment bank now expects U.S. shale oil production to increase by just 700,000 bpd in 2019, compared to an earlier forecast of 1 million bpd growth. This year’s production increase is seen at 1.1 million bpd.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on October 22 2019 said:
    The die is cast for the US shale oil industry. In 5-10 years it will be no more. Highly authoritative studies and reports have shown unambiguously that shale oil production is slowing down fast even in the Permian which accounts for 60%-70% of US shale oil production.

    According to the International Energy Agency (IEA), US oil production of which shale oil has the lion’s share, grew by only 140,000 barrels a day (b/d) between January and July this year. This contrasts with Goldman Sachs’ projection that US shale oil production will increase by 700,000 b/d in 2019.

    Therefore, US oil production could be projected to average around 11 million barrels a day (mbd) this year and between 10.0 mbd and 11 mbd in 2020.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Gumby Koontz on October 22 2019 said:
    The word is long out that our future charging stations will be mostly powered with industrial generators that will still use either clean diesel or gasoline or even natural gas whatever. the long held fantasy that solar and wind power will be solely used to charge many more millions of electric vehicles expected by us in the near future is well just another fantasy of our own makings ..While it is true that utilities no longer use oil to power massive generators the size of yachts with pistons the diameter of trashcans, smaller yet massive industrial generators , long main stay for commercial businesses , placed in the back of the buiildings are starting to show , well kind of sneaked into next doors of unwitted neighbors , with full help by utilties through so called DER programs that are often billed as for solar and wind only but not factually true at all. I encourage readers to google under "industrial generators" to help yourselves better acquainted with the looks of those by clicking under image tab instead of news, shopping,map, etc. you know what I mean? Go ahead do that ! Industrial generators will grow with electric vehicles so will the shale rock oil as well. I may be making some up because they are there yet because we still do not have that many enough electric vehicles around to make it a reality as of yet .. It will happen, of course unless we are far more aggressive with clean energy growth however it will be done, I have no idea! it is just a very realistic prediction of things to come if we stay the course as we know it of now.. This is where I am pointing you all to..
    They may change, of course..
  • Phil Mirzoev on October 23 2019 said:
    "Russia Predicts The Death Of U.S. Shale" And rightfully so - by historical measure and time scale this shale affair is reasonably presumed to be a flash in the pan - and why shouldn't it be?
    These are extremely low quality deposits - slops on the bottom of the barrel - combined with a relatively efficient technology of "scrapping the bottom of the barrel". But to produce from "scrapping the bottom of the barrel" is possible only so long..
  • Robert Sanchez on October 24 2019 said:
    Richard Hienburg one of the peak oil gurus wrote a book entitled "Snake Oil" in which he stated the shale oil boom would be a flash in the pan in the history of the oil industry. It is low quality, capital intensive and has a lower energy return compared to conventional oil. Most shale wells have an average life of five to seven years. In the next ten years there will still be an oil industry but will largely be for the production of petrochemicals and far less for transportation. If we are not in an electric transit - alternative energy revolution we are at least in an electric transit - alternative energy rapid evolution.
  • Paul Thiel on October 25 2019 said:
    So, a year ago, WTI price was in the mid 60's to 70's. Today it's in the low 50's. When the price drops, supply also drops as well. This is known as supply and demand. Not exactly rocket science.
  • E.M. Shalev on October 26 2019 said:
    The die is cast for the US shale oil industry. Within 10 years it will be at peak efficiency.  According to the brilliant analysis of global authority on energy supply and demand dynamics, Prof. Dr. Fritz Krautkopf, shale oil production quickly slows in accordance to falling price of oil and somewhat less quickly quickens when the price rises. 

    According Prof. Dr. Krautkopf, the IEA data compiled over the last decade on US oil shale production, demonstrate an increasingly efficient and reactive sector, which should remain robust and stable, until such time as cleaner engergy resources, such as natural gas, nuclear and renewable sources gain global market dominance.     

    Therefore, it is not possible to accurately project US oil production, and such projections will have little bearing on the health and wealth of the sector. 
  • Rudolf Huber on October 28 2019 said:
    Sure, that's why they try to cop it. With very little success it must be said so the frustration might make the grapes sour for them. Shale cannot be directed by the central authority. Its a private effort on private ground owned by private citizens that manage their own lives freely. That is not a very Russian thing and if you cant imagine it, you predict its demise.
  • Charles Kao on October 29 2019 said:
    Only the fit will survive, as always.
  • Seth D on October 29 2019 said:
    More hilarious wishful thinking from countries with devastated economies thanks to U.S. Shale under-cutting their pricing leverage, and damaging their ability to finance trouble around the world.

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