Rystad Energy: All That Talk About A US Shale Slowdown? Not So Fast -- January 20, 2020

Link here (and below). Spend some time on this one. Archived.

A reader provided this comment based on Rystad Energy analysis of the US shale plays:

Rystad Energy provides pushback on the anti-shale stuff from oilprice.com and others in the mainstream media. From Rystad Energy, best shale predictor last three years:

https://www.rystadenergy.com/newsevents/news/newsletters/UsArchive/shale-newsletter-jan-2020/

0. Yes, rate of growth in 2019 was less than 2018. But 2018 was monstrous at almost 2 million bopd. Still had over 1 million bopd in 2019 (used to be considered large).

1. Permian is most important at ~70% of growth. But still worth checking the other basins to see where the 30% growth comes from.

2. New Mexicanos on pace to pass the North Dakotans in oil production in 3-4 years. Where did you hear that earlier? ;-) [This assumes the environmentalists in New Mexico don't get the upper hand.]

3. A lot of the negative shale stories come from journalists covering the independent shale companies (which have halved growth). But privates and supermajors actually increased growth in 2019 versus 2018. Don't see whole story of the industry if you only follow the "name" shale companies.

4. Long laterals (two-mile vs one-mi)le increasing steadily, with change to development drilling. Old story for the Bakken, but other plays catching up.

5. Base decline ("Red Queen") is starting to flatten out. Grew a lot in 2018 because of the massive boom of new wells. But starting to settle down with slower growth of 2019. (2H19)

5.5. Meanwhile (2H19), wells are STILL getting stronger in new oil production. Sorry peak oilers. Shale keeps getting stronger, not weaker! (Sit down in the corner, Art Berman and hang that sign around your head and put on the cone shaped hat.)

P.s. Note for 5/5.5, the figure actually has a different scale on the bottom part of the y axis (1000 bopd, total shale versus bopd/well). It's a little confusing, but I understand why they want to compare the two. It shows why shale is still growing, even with fewer completions (rig and frack spread drop). Thing is that we're still making more wells than needed to just match the Red Queen.

Year-on-year growth.