Is the USA Shale Boom Over?
The U.S. shale boom is done, according to Stephen Brennock, an oil analyst at
PVM Oil Associates.
“Several factors are behind the end of the U.S. shale boom,” he told Rigzone.
“First and foremost, capital discipline has usurped the production growth model
of years gone by. Secondly, producers are facing mounting service cost
inflation. And thirdly, the stock of top-tier acreage is falling resulting in reduced
bang for your buck,” Brennock added.
When asked if the U.S. shale boom was over, Fitch Solutions Country Risk &
Industry Research sent over a report to Rigzone, in which it stated that U.S.
shale was “growing but slowing”.
“The bulk of non-OPEC+ supply growth will be led by the U.S.,” Fitch
Solutions stated in the report.
“While we forecast growth to remain strong, we expect it will decelerate, falling
from 5.5 percent in 2022, to 4.8 percent in 2023. The latter also marks a
significant downgrade from the 5.9 percent we had forecast last month,” the
“Growth is being hamstrung by ongoing cost pressures in the shale patch, which
is offsetting a relatively healthy rise in capex. Many companies, the larger and
listed producers, are reluctant to spud more wells, instead recycling their recent
excess revenues into increased shareholder distributions and debt repayments,”
the report continued.
In a statement sent to Rigzone, Chetan Sharma, a Senior Associate Enverus
Intelligence Research (EIR) said, “like many other forecasters, we have been
surprised by the slow pace of supply growth in the U.S. through 2022 and
attribute it to the degradation of average well performance in the Permian Basin
as well as lagging oil field service capacity”.
“We expect private operator inventory exhaustion to drive a plateau in Permian
supply growth by the end of the decade,” Sharma added.
Asked if he thought the U.S. shale boom was done, Luke Smith an analyst at
Westwood Energy Global, told Rigzone, “booms are not solely measured by
population size but also by competition, and the U.S. onshore oilfield continues
to be a competitive landscape among service providers”.
“The emphasis on electrification of drilling and completion operations has led
to power generation and distribution challenges which are being solved by new
entrants and existing businesses. Lateral lengths are getting longer, and pads are
becoming denser, which strains logistical and hydraulic horsepower resources
on the completion side,” he added.
“In response to these challenges, companies are offering mobile mini-mines
which are closer to the well head, wet sand which does not require expensive
and time-consuming drying, and simultaneous frac operations which put the
zipper frac into overdrive,” Smith continued.
“These are just some of the challenges facing the industry and some of the
solutions being provided due to the sustained high activity levels. With SPR
drawdowns on the decline and China’s curtailment of Covid restrictions, there
seems to be potential for further growth in the U.S. onshore,” Smith went on to
SOURCE – RIGZONE