Experts think that US shale industry has been in dire straits. The shale production has passed its boom, Matt Gallagher, chief executive of Parsley Energy, shares his ideas.
Citing the head of one of Texas’ biggest oil companies, the US will not be able to produce 13 million barrels per day as it used to do. “I don’t think I’ll see 13m [barrels a day] again in my lifetime,” Matt Gallagher told the Financial Times. The shale production is set to decline ever since. Nevertheless, even with lower shale output, the US will remain at the forefront of the oil market.
The US Energy Department reported that the biggest shale output of 12.9 million barrels per day was recorded in November 2019. In February 2020 shortly before the oil market crash, US drillers were producing 12.8 million bpd. The soaring shale output in 2019 enabled the US to become a net oil exporter. At present, experts suppose that American energy companies will hardly be able to revive previous high output rates. The US shale industry shrank as much as by a quarter this spring amid a collapse in oil prices due to the Saudi-Russian price war and the coronavirus pandemic.
Domestic oil companies set a goal to break the previous record this year, speeding up output rates to 13.3 million bpd. However, the shale ambitions have not been fulfilled amid a tough reality. COVID-19 forced governments around the world to impose lockdown measures which crippled logistic chains and banned any travel. Besides, the OPEC+ pact on oil production cuts collapsed in early March. Such headwinds slashed global demand for crude oil. As a result, Brent futures plummeted below $15 a barrel, having lost nearly $50 since January 2020. WTI futures briefly traded below zero in April.
A new OPEC+ deal set the oil market in motion in late April. The largest oil exporters agreed on oil production cuts of 9.7 million barrels per day with prospects of easing these restrictions. The cartel and its allies are expected to scale back their output to 5.7 million bpd by May 2022. Oil prices perked up immediately following this move. Brent crude promptly regained footing. It was trading at near $40 a barrel in June.
