If current crude flow data forms the basis of industry opinion, US shale oil production has shifted the tectonic plates of the market. Thanks largely to a massive output uptick in shale plays like the Bakken, Permian and Eagle Ford, the country has more than doubled headline crude production over the past decade.
At around 12.5 million barrels per day (bpd), the US is already the largest producer in the world and some forecasters are predicting a rise to 13.1 million bpd by 2020. Rising volumes have also given shale players the title of being buffer producers, largely insulating the market from price spikes caused by outages elsewhere.
For some, a continuation of the boom is not in doubt. According to the US Energy Information Administration (EIA), production from seven major American shale plays is forecast to climb by 49,000 bpd in December to 9.133 million bpd.
At its heart is the Permian Basin, in West Texas and Southeast New Mexico, where the EIA expects the biggest month-over-month increase of up to 57,000 bpd. Looking at the long-term, an unlikely source appears to have given US shale its backing – none other than rival producers’ group OPEC, which expects a flood of shale barrels and less of a call on its members’ crude.
“The main driver of medium-term non-OPEC supply growth remains overwhelmingly US tight [shale] oil,” OPEC recently noted in its markets outlook. By 2025, OPEC expects US oil production, courtesy shale, to have risen by over 40% from its current level to 17 million bpd; an upward revision of 3.1 million bpd over the group’s forecast last year.
While some are optimistic, others are only too keen to puncture the enthusiasm. The latter club surprisingly includes shale pioneers themselves and not just market forecasters. In a recent analysts’ call, Pioneer Natural Resources Chief Executive Officer Scott Sheffield said shale output growth will slow next year thereby creating a price supportive environment.