Skimming headlines lately, you’d be excused for thinking that America’s shale boom might be close to running its course, with stories about U.S. frackers being put under immense pressure by bargain crude prices coming thick and fast. But while it’s true that $30 oil seriously challenges the profitability of most shale wells and American crude production has tapered off in recent months, the future doesn’t look quite so bleak. In fact, according to a new BP report, U.S. shale production is set to double over the next 15 years. Reuters reports:
[American shale production] is set to grow from around 4 million barrels per day (bpd) today to 8 million bpd in the 2030s, accounting for almost 40 percent of U.S. production, according to [BP’s 2035 Energy Outlook]…”We see U.S. tight oil falling over the coming years but thereafter tight oil picks up,” BP Chief Economist Spencer Dale said [. . .]
According to the report, “technological innovation and productivity gains have unlocked vast resources of tight oil and shale gas, causing us to revise the outlook for U.S. production successively higher”. Globally, tight oil production will rise by 5.7 million bpd to 10 million bpd but remain primarily concentrated in the United States.
American oil output has climbed above 9 million barrels per day on the back of the shale revolution, and it’s clear that there is still plenty of oil and gas to be tapped from those rock formations, despite the unfavorable market conditions. It doesn’t matter how low prices drop—those reserves of oil will still be down there, and when prices rebound or shale firms find ways to produce more efficiently, U.S. output will swell. Already American producers have defied analysts’ expectations with their ability to keep output up despite bargain prices, and our overall production numbers are only slightly down from their recent high water mark last April.
That resilience can be put down to the shale industry’s remarkable ability to innovate its way out of a corner, which should come as no surprise given that this whole phenomenon came about through the clever deployment of two different technologies—hydraulic fracturing and horizontal well drilling—to tap rock formations previously thought unsuitable for drilling. When you put that sort of inventive spirit together with America’s prodigious bounty of natural resources, you’ve got an equation for decades of strengthened energy security. Hail shale!