Has U.S. Oil Production Peaked?
Posted: Sat Dec 21, 2024 10:44 am
From Jim Wicklund at PPHB
Another Perspective.
“The great drama of American shale production may now be nearing its final act. For years, we have anticipated that the relentless growth in shale output would crest by late 2024 or early 2025, catching many off-guard. In hindsight, even this expectation might have erred on the side of caution. Quietly and without much fanfare, both shale oil and shale gas appear to have passed their zenith several months ago. Recent data from the EIA reveal that shale crude oil production reached its high-water mark in November 2023, only to slide 2%, roughly 200,000 barrels per day, since then.”
“Likewise, shale dry gas production peaked that same month and has since slipped by 1% or 1 billion cubic feet per day. The trajectory from here, according to our models, looks steeper still.” < MY TAKE: Shale gas production has more upside. The significant decline in rigs drilling for gas was caused by low gas prices and lack of pipeline capacity. We are going to see higher natural gas prices in 2025, probably much higher if we have much colder winter in the Eastern U.S. in January/February.
“The depletion paradox had firmly taken hold. The industry’s assumption, that higher prices alone could counteract geological realities, proved tragically flawed. Today, as we observe the shale sector grappling with similar dynamics, it seems history may once again be repeating itself.”
“We believe the U.S. shale sector now stands at a crossroads eerily similar to that faced by conventional oil production in 1973. While shale’s achievements have been extraordinary, they remain subject to the inexorable forces of depletion. Yet, the industry, Wall Street, and the President-elect appear poised to repeat the missteps of half a century ago.”
“The lessons of history are clear: enthusiasm for growth, however well-intentioned, cannot override the fundamental constraints of geology. And if we fail to heed these lessons, we risk not just disappointment, but the stark realization that higher prices and bold policy initiatives are no match for depletion’s steady advance.”
Another Perspective.
“The great drama of American shale production may now be nearing its final act. For years, we have anticipated that the relentless growth in shale output would crest by late 2024 or early 2025, catching many off-guard. In hindsight, even this expectation might have erred on the side of caution. Quietly and without much fanfare, both shale oil and shale gas appear to have passed their zenith several months ago. Recent data from the EIA reveal that shale crude oil production reached its high-water mark in November 2023, only to slide 2%, roughly 200,000 barrels per day, since then.”
“Likewise, shale dry gas production peaked that same month and has since slipped by 1% or 1 billion cubic feet per day. The trajectory from here, according to our models, looks steeper still.” < MY TAKE: Shale gas production has more upside. The significant decline in rigs drilling for gas was caused by low gas prices and lack of pipeline capacity. We are going to see higher natural gas prices in 2025, probably much higher if we have much colder winter in the Eastern U.S. in January/February.
“The depletion paradox had firmly taken hold. The industry’s assumption, that higher prices alone could counteract geological realities, proved tragically flawed. Today, as we observe the shale sector grappling with similar dynamics, it seems history may once again be repeating itself.”
“We believe the U.S. shale sector now stands at a crossroads eerily similar to that faced by conventional oil production in 1973. While shale’s achievements have been extraordinary, they remain subject to the inexorable forces of depletion. Yet, the industry, Wall Street, and the President-elect appear poised to repeat the missteps of half a century ago.”
“The lessons of history are clear: enthusiasm for growth, however well-intentioned, cannot override the fundamental constraints of geology. And if we fail to heed these lessons, we risk not just disappointment, but the stark realization that higher prices and bold policy initiatives are no match for depletion’s steady advance.”