OilPrice – If you’re a fan of oil, and I expect you are seeing as how you’re reading articles on OilPrice, get ready for a positive forecast about oil prices moving higher.
You’re going to like the direction this article takes. Oil prices are getting ready to rise…dramatically. We are going to move from a perception of severe surplus due to the global economic slowdown, to a reality of intermittent and localized shortages. This will be strongly evident in the 4th quarter of this year. Let me set the stage for this prediction.
In a recent OilPrice article I put forth a fairly bold theory about where the Super Majors might turn to replace lost shale production, given the oilfield, “tent-folding,” that’s underway now. To substantiate this theory I relied upon some logic based on my 40-years of experience in this business, and some general trends published by Rystad regarding the effects of underinvestment in a certain segment of the market. I now have some hard data which I will share in this article.
The market segment to which I refer is, of course, deepwater. Unloved and cast aside the last 6-8 years for hyper-investment in U.S. shale. The shale merry-go-round funded by cheap money and easy credit fueled our production growth to new heights over the last decade.
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When you add up the EOY production from shale, the Gulf of Mexico, and Alaska we were producing nearly 13 million bpd at the start of 2020.
My use of the term, the merry-go-round is purposeful above, as it required constant infill drilling to maintain and grow production. As the oil price crashed after the Wuhan Covid-19 advent, and the OPEC+ failure of early March, it became increasingly obvious the shale “miracle” had come to an end. Here’s a quick activity snapshot for shale and then we’ll move on as the theme of this article is “what’s coming,” not “what’s happened.”
Source – https://oilprice.com/
