Oil 2020, whilst it may read like ancient history, was released less than three weeks ago.The IEA has US shale growing by almost 2.5mn b/d (see chart). But, with virtually all producers slashing capex, bets are off as to whether there will be any output growth at all to 2025. The IEA’s alternate ‘$40/B’ scenario, which has shale output falling by 1mn b/d to under 7mn b/d by 2025 is certainly now more representative of the zeitgeist (MEES, 13 March).
Even as of January, ie before the latest oil price slump, the 4.8mn b/d Permian Basin of Texas and New Mexico was carrying US output growth single-handed with all other basins down on 2019 highs (MEES, 6 March). Now, with 2019’s top two Permian producers Occidental and Chevron, as well as a slew of smaller producers (MEES, 20 March), announcing swingeing capex cuts, output in the Permian is set to also slump. The dramatic rise in production in the second half of 2019 may mean that 2020 output as a whole is somewhat higher than 2019, but output is set for a major tumble in the remainder of 2020. (CONTINUED - 1324 WORDS)