ESAI Energy forecasts that US shale oil production will reach 5.6 million b/d by Dec. 31, more than 1 million b/d higher than at the end of 2016. But the pace of growth is expected to slow in 2018 as current oil prices below $50/bbl are likely to hinder the momentum of rig additions.
US shale and tight oil producers have become more capable of operating profitably with lower oil prices than a year ago, but most require an oil price in the upper $40s/bbl to break even, ESAI said.
ESAI believes the most active basins will see cost inflation of roughly 15-20% in 2017. Analysts expect that productivity gains of 2015-16 are starting to show signs of leveling off.
As operators move outside the unconventional core areas, productivity could fall further. Cost inflation and falling marginal productivity along with lower than expected oil prices will give producers pause in deploying additional capital to their drilling programs.
Elisabeth Murphy of ESAI said, “Although the pace of growth is expected to slow next year, US shale production is forecast to be about 500,000 b/d higher in 2018 than 2017, still very impressive growth.”
