US Shale Growth No Cause for Concern

Copyright © 2021 Energy Intelligence Group

US oil is staring down its highest price in seven years. But don’t expect $80 crude to spur a return to maximum growth. Production will most certainly rise next year, as major producers pack away this year’s “maintenance” budgets set when crude was half its current price. But the top-heavy, still-consolidating shale sector still has capital discipline in its sights — and companies won’t quite be able to get the same bang for their capex buck. Energy Intelligence’s Oil Markets Service expects US crude output to average 11.1 million barrels per day this year. That marks its lowest annual average since 2018, but is a healthy clip above the 9.7 million b/d lows touched in May 2020 during the height of the pandemic-led price collapse. The focus this year has been to stabilize output, and production has indeed been even keeled outside of storm-led disruptions. But growth lies ahead. Assuming US benchmark West Texas Intermediate (WTI) averages $75 per barrel next year, Energy Intelligence figures output will exit 2021 at 11.3 million b/d — roughly flat with current levels — and end 2022 at around 12 million b/d. That would peg full-year 2022 output at 11.7 million b/d, well below pre-pandemic heights near 13 million b/d.

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