Musings: Three Cheers For The US Oil Industry! Hold The Predictions

The business scenarios flowing from the answers to our question reflect the two ends of a spectrum, with the likely outcome falling somewhere in between. Just where we land along this spectrum will dictate the level of future petroleum industry activity and thus that of the service companies who perform the work. The more important issue will be how the shale outlook answer impacts the overall U.S. energy balance and global energy and political dynamics. While we remain optimistic for the petroleum industry’s outlook, we are not ready to sign on to energy independence or the return of the U.S. to the number one oil producer in the world. We welcome being proven wrong, however.


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WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Jeffrey J. Brown  |  June 28, 2013
As of last year, the US was still a net natural gas importer, and a recent Citi Research report puts the current year over year decline rate from existing natural gas production at about 24%/year. This means that to just maintain the current dry natural gas production rate of about 66 BCF/day (billion cubic feet per day), which incidentally has basically been flat since late 2011, the industry would have to replace the equivalent of virtually 100% of current natural gas production over the next four years. On the oil side, a conservative estimate for the year over year decline rate in existing US crude oil production is about 10%/year, which suggest that the industry, just to maintain current crude oil production, would have to replace the equivalent of 100% of current US crude oil production over the next 10 years--everything from the Gulf of Mexico to the Eagle Ford Play to the Permian Basin to the Bakken and Alaska. For more info, you can search for: It is just a question of when the US becomes a net oil exporter? While recently rising US crude oil production (to a level about 25% below our 1970 peak rate) is very helpful, the dominant global trend we are seeing is that developed net oil importing countries like the US are gradually being shut out of the global market for exported oil, as the developing countries, led by China, have (so far at least) consumed an increasing share of a post-2005 declining volume of Global Net Exports of oil.
billyjack  |  June 27, 2013
There is no oil coming from the shale. The hydraulic fracturing is fracturing into the carbonates above and below the shale that have been produced for 50 years at high decline rates and marginal rates of return. Unless the number of rigs keeps increasing the point of diminishing returns will no longer be able to maintain an increasing production rate as the larger number of high decline rate wells will overwhelm the new production coming on line. Look at the Austin Chalk history and you will observe what is going to happen in the Eagleford.


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