Oil at $90 offers best ever economy for US shale

0

The Permian has led U.S. shale production growth in recent months and will continue to do so in the months to come, but higher oil prices so far in 2022 have also led to an increase in mining activity. drilling in other shale basins with higher equilibrium prices.

Oil at $90 is prompting more drilling activity in the Bakken in North Dakota, the Eagle Ford in Texas, the DJ Basin in Colorado and in Wyoming as the drilling economy at these high oil prices oil – the highest since 2014 – is too attractive to ignore.

In fact, the economy is the best since the shale revolution began, say some oil service companies, as oil prices are high while many producers are disciplined in their spending.

“The economics of drilling are better today than they have been since the shale revolution began,” said Chris Wright, managing director of Liberty Oilfield Services. Reuters.

Like the largest oil service providers, Schlumberger and Halliburton, Liberty Oilfield Services also sees “a bullish cycle driven by rapidly tightening oil and gas markets” in the U.S. industry, Liberty said in its 2021 results. Release Tuesday.

“E&P operators react to oil and gas price signals. Public operators maintain discipline and will post only modest production growth this year, while private operators are reacting more vigorously to high commodity prices,” Liberty Oilfield Services said in its outlook for this year.

Public supermajors ExxonMobil and Chevron plan 25% and 10% increase in their Permian production this year, respectively. Many other public and private operators will also increase their oil and gas production in the Permian, where production hit a record high in recent weeks and should continue to grow.

The other, more expensive basins are also experiencing increased activity, although on a smaller scale than in the Permian. North Dakota, Wyoming, and Colorado basins that have taken longer to recover from the COVID-induced downturn are already seeing increased activity and production.

“It is encouraging to see that the state’s industry and economy appear to be recovering from the pandemic-induced downturn and the 2020 market sooner than expected. The number of rigs operating in the state continues to increase, with 18 rigs reported as of December 2021,” the Wyoming State Geological Survey (WSGS) said in a January statement. report on Wyoming’s oil and gas resources.

“In fact, in the October 2021 report from the Wyoming Consensus Revenue Estimating Group, the oil production estimate for 2021 improved 31% from the forecast made a year ago,” Erin wrote. Campbell, state geologist and director of the WSGS.

“Recent forward-thinking projects have improved the outlook for Wyoming’s oil and gas industry through 2022 and beyond,” Campbell said in a statement carried by Wyoming-based media. County 17.

“We’ve seen a rebound in oil production in the state that’s not where it was before the pandemic, but definitely on that course,” said Rob Godby, an energy expert at the University of Wyoming. . Wyoming Public Radio at the end of January.

Oil production in Wyoming, North Dakota and Colorado may not return to pre-pandemic peaks, but it is certainly on the rise as high oil prices once again make the economy drill and excellent projects.

Supply chain challenges and higher labor and equipment costs could be stumbling blocks for US shale, especially for basins with higher equilibrium prices.

Yet US crude oil production is ready to break a new record of 12.4 million barrels per day (bpd) in 2023, the Energy Information Administration (EIA) said in January’s Short-Term Energy Outlook (STEO) report.

Tuesday, the EIA raised its production forecast, expecting U.S. crude oil production to average 12.0 million bpd in 2022 and 12.6 million bpd in 2023, a yearly record and 200,000 more bpd than last month’s estimate. The previous annual average record of 12.3 million bpd was set in 2019.

By Tsvetana Paraskova for Oilprice.com

More reading on Oilprice.com:

Share.

About Author

Comments are closed.