US Shale: Major Growth Planned, Indies Crimp Spending

As US shale output passes 8mn b/d the sector is increasingly becoming the domain of the majors. Long-term investment plans involving petchems, LNG and export facilities will see Exxon and Chevron grow production almost irrespective of oil prices. The era when small E&Ps dominated, and activity swung wildly, is drawing to a close.

Latest data from the US shale patch is sharply schizophrenic. Output continues to break new records – the total for seven key shale basins broke 8mn b/d for the first time in December with overall US crude output just shy of 12mn b/d. The US Government’s EIA forecasts further rises with crude output to average 13mn b/d for 2020, 18mn b/d including NGLs ( MEES, 15 March ). The key Permian basin is slated to hit 4mn b/d for the first time this month, according to the EIA’s latest Drilling Productivity Report.

But shorter-term the picture is not so rosy. US crude output flatlined at 11.9mn b/d over November-February (see data, MEES, 15 March ). Indeed, steady output is something of an achievement given that drilling activity has slumped: the US oil rig count was 834 on 8 March, a 10-month low. This meshes with the picture painted by services firms in their Q4 earnings calls: Paal Kibsgaard, CEO of the largest, Schlumberger, predicted “it’s going to be a fairly tough year in North America” ( MEES, 25 January ). (CONTINUED - 2068 WORDS)

DATA INSIDE THIS ARTICLE

chart 1: Oxy Net Permian Liquids Output Hit 348,000 B/D In Q4, Up 28% Year-On-Year (‘000 B/D)
chart 2: More With Less? Apache Expects To Top 2014’s Previous Permian Oil Output High This Year With A Fraction Of The Rigs