OilPrice.com on 24 November posted “The U.S. Shale Boom Is Officially Over”. This posting offers some of the author’s views.
The days of explosive growth in U.S. shale oil production are over. American oil production is rising, but at a much slower pace than it did before the 2020 crash, and at lower rates than expected a few months ago.
The new priorities of the shale patch – capital discipline and a focus on returns to shareholders and debt repayments – have coupled with supply chain constraints and cost inflation to drag down U.S. oil production growth.
The Biden Administration’s mixed signals to the American oil and gas industry, with frequent blaming of the sector for high gasoline prices and, most recently, a threat of more taxes, are not motivating U.S. producers, either. Many are reluctant to commit to spending more on drilling when there isn’t any medium-to-long-term vision of how the U.S. oil and gas resources could be used to boost America’s energy security and help Western allies who depend on imports.
This year, while U.S. oil and gas production continues to increase, the growth is capped by cost pressures and supply-chain delays, executives said in the Dallas Fed Energy Survey for the third quarter. The shale patch cites labor and equipment shortages, as well as the Biden Administration’s inconsistent policies, as the key hurdles to expanding drilling activity.
“The administration’s lack of understanding of the oil and gas investment cycle continues to result in inconsistent energy policies that contribute to rising energy costs. This continued inconsistency increases uncertainty and decreases investments in energy infrastructure,” an executive at an oilfield services firm said in comments to the survey.
“We are in an energy death spiral that will lead to higher highs and lower lows. Volatility will increase, and the public is in for a very difficult ride.”
I recommend you read the entire posting.