Energy Prospectus

Because production from horizontal shale wells declines rapidly soon after they are placed on production, the U.S. annual depletion rate has risen from ~6% before the shale revolution to over 20% today. Add in the shut-in of uneconomic wells that will not come back online and we should see a decline in U.S. oil production of over 3 million BOPD from April 1, 2020 to March 31, 2021. By the end of March U.S. oil production should be under 10 million BOPD (from the peak of 12,860,000 BOPD in November, 2019) and it will keep falling until we have ~600 rigs drilling for oil. On 11/13/2020 Baker Hughes reported that only 236 rigs were actively drilling for oil in the U.S. and only 73 drilling for gas.

U.S. shale oil output to drop 139,000 bpd to 7.51 million bpd in December: EIA . Reuters .
U.S. oil output from shale formations is expected to decline by about 139,000 barrels per day (bpd) in December to about 7.51 million bpd, the lowest level since June, the U.S. Energy Information Administration said in a monthly forecast on Monday. Output at nearly all seven major formations is expected to fall, except the Haynesville region, where output is forecast to remain largely steady. The biggest decline is expected to come from the Permian basin of Texas and New Mexico, where production is expected to drop by about 37,000 bpd, the biggest decline since May, to 4.3 million bpd, the data showed. Natural gas production is also expected to fall to the lowest level since June, at 81.5 billion cubic feet per day (bcfd), a drop of 0.7 bcfd.

Read more: https://www.reuters.com/article/us-usa- ... SKBN27W2NK

OPEC+ sees deficit, eyeing 3-month extension. The extension of the OPEC+ production cut deal by three to six months will swing the oil market into a deficit next year, the group believes. OPEC+ is considering four possible scenarios for 2021. The group is leaning towards a three-month extension, sources told Reuters.

Oil rally on the horizon. Multiple vaccines could set the stage for a rally next year. Meanwhile, even with the energy transition looming in the long run, oil and gas demand will rebound next year and beyond.

Natural gas prices sink on mild weather. Natural gas futures plunged by more than 8% on Monday on an updated weather forecast that suggested the winter across the U.S. could be relatively mild. Shares for a long list of natural gas companies sank on the news.

It's science fiction to imagine that oil and gas will suddenly disappear because of renewable energy progress. This is all longer term, even if the media makes it seem like it's going to happen tomorrow. It's been clearly established that natural gas will be the bridge to a clean energy transition, especially since electricity will likely end up being one of our most important energy sources, and natural gas is at least cleaner-burning than oil. Read more: https://oilprice.com/Energy/Crude-Oil/A ... rizon.html