Economists predict a 75% collapse in oil shale production by 2025 in the United States.
In 2018, total oil shale production in the United States amounts to just over 5 million barrels per day, and total reserves to 20 billion barrels, but this could change.
The collapse of oil shale production will lead the US to the death of energy independence. As it cumulates and declines, U.S. oil shale production could fall much faster than expected. The pace of this decline will be based on two key factors: the price of oil and remaining reserves.
When oil prices declined in 2014 and reached their lowest level in 2016, frackers significantly reduced drilling. As a result, total U.S. shale production during this period decreased by approximately 600,000 barrels per day (Shaleprofile.com). The cause of this drop was mainly due to the low oil price, which did not make drilling profitable.
If US shale oil production reaches a peak and oil prices are much lower, it will be a disaster for the US shale oil industry. When the current 9-year economic cycle is renewed, there will be a major market correction.
Half of the total oil shale reserves have already been exceeded. However, if oil prices remain low during a deflationary recession, the peak and decline in US oil shale production is likely to be even more significant.
Pioneer Resources, the largest producer in the Permian Basin, recorded a negative cash flow of $248 million in the first half of 2018 by spending $1.6 billion on capital expenditures. The reason for this expenditure was to increase the production by 21,000 boe (barrels of oil equivalent) per day between the first and second quarters of 2018, representing an 8% growth. This is to compensate for the high rate of production decline in the shale industry.
If no new wells had been drilled in 2018, overall production would have decreased by 500,000 barrels per day in the first five months of 2018 alone. It takes a lot of capital expenditure to replace the 500,000 barrels lost per day.
When American oil shale production falls by 75% by 2025, the American way of life will be deeply affected.
Posted by: BUNKER GOLD&SILVER