The U.S. shale oil industry is likely to see production growth grind to a halt in the near term, according to IHS Markit.
In its latest outlook for oil market fundamentals, the London-based consultancy said that U.S. shale oil output was set to grow by just 440,000 barrels per day (bpd) in 2020 and then remain stagnant in 2021. This represents a major departure from the increases posted in recent years, said Raoul LeBlanc, IHS Markit’s vice president for North American unconventional resources.
“Going from nearly 2 million bpd annual growth in 2018, an all-time global record, to essentially no growth by 2021 makes it pretty clear that this is a new era of moderation for shale producers,” said LeBlanc. “This is a dramatic shift after several years where annual growth of more than 1 million bpd was the norm.”
LeBlanc said that low crude prices had definitely contributed to the slowdown in shale oil production. Shale operators have fewer options for weathering this bear market than they did the last time around, partly because debt and equity markets have been tighter and partly because there is less room for improvements in productivity, he said.