It’s Official. The collapse of U.S. shale oil production has begun. The mighty Shale Oil BOOM has now finally turned into a BUST. While the pandemic shutdowns sped up the process, the collapse of the U.S. shale industry was going to occur, regardless. According to the U.S. Energy Information Agency, shale oil production will continue to decline below 7.5 million barrels per day in January.
At the peak last year, the top five shale oil fields combined production reached nearly 9.2 million barrels per day. Since the shutdowns during March-April, many of the companies curtailed shale oil production. However, all of these wells have now been brought online, but the massive decline rate is kicking in due to a lack of drilling and completion activity.
As we can see in the chart below, shale oil production in these five fields fell from 9.16 million barrels per day during the peak in 2019 to 7.27 million barrels per day forecasted next month (January).
In a little more than a year, the combined shale production from these five fields declined by 1.9 million barrels. The data in the chart above is shown in thousand barrels per day. According to Shaleprofile.com, these five fields add more than 11,000 new wells in 2019. In looking at the new well trend data for Jan-Oct 2020, I would be surprised to see more than a total of about 5,000 wells added this year.
While the Permian suffered the highest decline in shale oil production, the biggest loser in percentage terms was the Anadarko Field. Oil production from the Anadarko declined from 603,000 barrels per day (b/d) at the peak last year to a forecasted 363,000 bd in January. That’s a stunning 40% decline in a little more than a year.
The Niobrara in Colorado reported the next largest decline at 34%, followed by the Eagle Ford (-30%), Bakken (-22%), and Permian (-18%). The average percentage of production decline from the fields since the peak last year was 21%.
Oil Geologist Art Berman produced this chart showing where he forecasts U.S. oil production by September 2021.
Art believes total U.S. oil production will decline to 7.7 million barrels per day by September 2021. However, I don’t believe this forecast will happen because his chart shows total U.S. oil production will be approximately 10.2 million barrels per day by January 2021. The EIA reports that U.S. oil production is 11.0 million barrels per day on Dec 11th.
It’s probably more realistic to forecast a decline to 9.5-10 million barrels per day by September 2021. We will see. Regardless, the mightily U.S. shale oil Boom has now turned into a Bust. While it will take 5-10 years to collapse by 75%, it’s not ever coming back.
DISCLAIMER: SRSrocco Report provides intelligent, well-researched information to those with interest in the economy and asset values. Neither SRSrocco Report nor any of its owners, officers, directors, employees, subsidiaries, affiliates, licensors, service and content providers, producers or agents provide financial advisement services. Neither do we work miracles. We provide our content and opinions to readers only so that they may make informed decisions on all types of assets. Under no circumstances should you interpret opinions which SRSrocco Report or Steve St. Angelo offers on this or any other website as financial advice.
Check back for new articles and updates at the SRSrocco Report. You can also follow us on Twitter and Youtube below:
Someday I’ll be interested to see someone analyze the impossible: US’ freshwater reserves.
What does that mean?
https://www.usgs.gov/faqs/how-much-water-does-typical-hydraulically-fractured-well-require?qt-news_science_products=0#qt-news_science_products
WOW! It says…
“Water use per well can be anywhere from about 1.5 million gallons to about 16 million gallons.”
I wonder… how much of that water comes from rivers, streams or lakes? And how much comes from water wells tapping into aquifers? And how much of that water is transported to the wells via tanker trucks or trains?
AND – do the frackers drill new water wells tapping into aquifers to acquire fracking water, and if so, does it cause water shortages for others in the area who may need it for farming, business and home use?
AND – if aquifers are tapped, how much of that water will never be replaceable due to subsidence?
To put all of this in a single question, which may require a complicated answer: What are all the water problems caused by water extraction and use for fracking?
I’m not at all concerned about the collapse of shale oil production. The energy tooth fairy will certainly save us.
Thanks Steve,
Americans worry about shale oil.
In the Middle East people are horrified what conventional, gold-grade oil might bring to them in destruction and death, again and again.
January 17 1991, the Gulf War and bombing of Iraq started. The scenes of women, children screaming and crying, the pale faces of men, wailing coming from some neighbours with family members have been reduced to limbs, deafening non-stop explosions everywhere – on that day – cannot be forgotten.
January 2021 is exceptionally worrying, as in the Middle East, people cannot understand what’s going on with the US election – and that makes them losing sleep.
January 20 2021 is becoming a nightmare for people in the Middle East – fearing it might be hiding for them bad surprises (scenes of C-RAM anti air weapons fired from the US embassy in Baghdad yesterday).
January is the right time to start a war over Iraq, owing to mild weather that may last until April – before the harsh summer starts.
It is E=mc^2 that should be blamed for all of this trauma, failing to deliver the energy abundance it promised, or humans wouldn’t have been worrying about oil that much – since 1905.
The problem might be in the Unsuitability of Unconscious Mathematics – a language for Physics – that is causing all this utter mayhem – from Washington to Baghdad.
Or, how c^2 in the equation, which stands for the speed of light, can be squared, exceeding the speed of light when the maximum speed of light is thought a constant?
If c^2 is not the speed of light put in the equation (and it mustn’t, because it exceeds the speed of light), then what it is?
The 20th century Physics cannot have it both way, fixing the maximum speed of light, then squaring and exceeding it.
The 20th century Physics cannot have it both way, promising an abundance of energy that very cheap to meter, on one hand, yet leaving the Americans today worried about shale oil, people in the Middle East worried-to-death from what conventional oil causes them of cataclysm, decade in decade out, on the other.
The failure of the Unconscious Mathematics, E=mc^2, 20th century Physics, Science, and the troubled US election – all coming together – terrify people.
Humans might be acknowledging one day soon they will never be able to run their modern processes exceeding the < 2% efficiency of photosynthesis – no matter what promises Unconscious Mathematics makes.
Wailing.