US Shale: Reading The Runes On Future Supply Growth

22 Jun 2018 Issue: 61 / 25 By: James Cockayne

Opec (and ‘non-Opec’) output policy will be one of two key determinants as to whether global oil supplies will be able to keep pace with demand over the coming 12 months. The other is the prognosis for US shale output. Stretched infrastructure, particularly for takeaway pipeline capacity from Permian, is clouding the outlook.

Collective US shale oil output topped 7mn b/d for the first time in May. At 7.07mn b/d, it’s up a massive 1.47mn b/d year-on-year, topping the previous record annual gain of 1.37mn b/d set in 2014. For the key Permian shale basin of west Texas, May’s 3.208mn b/d is not only a new record but up 830,000 b/d year-on-year (see chart, MEES, 22 June).

The US government’s Energy Information Administration (EIA) reckons that the party will continue, for now at least. The EIA’s latest shale-focussed monthly ‘Drilling Productivity Report’, released 18 June, forecasts new shale output records of 7.198mn b/d and 7.339mn b/d for June and July based on the latest drilling data. The latter figure would mark a massive 1.64mn b/d year-on-year increase (MEES, 15 June & MEES, 22 June for full data). (CONTINUED - 2314 WORDS)