Norway Plans to Develop a New $570-Million Oil and Gas Field
Despite the low oil prices that brought on by the combination of the coronavirus pandemic's migration to the United States and the oil price war between Russia and Saudi Arabia, US shale producers will together hit a new record output next month, according to the Energy Information Administration (EIA).
Today, the EIA predicted that OPEC's shift to maintain its market share will cause global inventories to increase further, and prices to fall further.
And the US shale will do its part to contribute to a global increase.
Oil production in the seven most prolific shale basins will hit a new high of 9.075 million barrels per day in April, an increase of 180,000 barrels per day. The largest increase will come from producers in the Permian basin, adding 38,000 bpd of the 180,000-ÂÂbpd total increase, reaching 4.79 million bpd.
All other basins are expected to see a decrease in oil production next month.
Meanwhile, gas production in those seven plays is expected to decrease, the EIA said, by 188 million cubic feet per day.
Related: The Most Destructive Oil Price Crash In History?
Russia and Saudi Arabia are waging an oil price war, with Saudi Arabia ramping up production to more than 12 million bpd, and has booked VLCCs to carry more oil to its customers for next month. Both Russia and Saudi Arabia have insisted that they can comfortably withstand these lower oil prices. Analysts aren't sure of those optimistic statements, nor that US shale will be able to keep its debt-laden head above water in a sub-$30 WTI environment.
US shale producers are now facing a more direct coronavirus challenge as lawmakers in the States work to shutdown nonessential businesses and activities in an effort to stop the coronavirus from spreading. In Texas, home to part of the Permian basin, schools have been closed and could remain closed for the remainder of the academic year, and Dallas and San Antonio have banned large gatherings.
In New Mexico, housing the other part of the Permian, Governor Grisham ordered state employees to work from home, and called on other businesses to follow this as well.
Other states have closed bars, restaurants and movie theaters, and the California Bay area has ordered residents to remain at home for three weeks.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
Comments
If it is still doing so well, why then did the Trump administration decide to buy 77.0 million barrels of US shale oil for the Strategic Petroleum Reserve in order to stave off its total bankruptcy.
Aside from the global economy, the US shale oil industry will be one of two major losers in the current price war. The other is Saudi Arabia. With a breakeven price of $70 a barrel and a well depletion rate of 70%-90% after first year production, low oil prices would for sure hasten the demise of US shale oil industry.
The US shale oil industry will be no more in 4-9 years from now.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London