There’s a growing body of evidence by those doing the work, crunching the numbers, and keeping an eye on oil & gas production and well productivity, which suggests future shale production may disappoint going forward. This aligns with the thesis that US shale basins have been “high graded.” This is a mining term which describes a scenario wherein the producer mines the cheapest and most productive resources first, despite the potential of rendering the remaining resources uneconomical. If this has occurred in America’s shale basins, we are probably headed for much higher energy prices in the long run.
The following Tweet thread by Shubham Garg presents some recent evidence of this from Pioneer Resources operations in the Permian basin:
There’s also a recent article from the Financial Times titled US shale bosses tell Europe: ‘There’s no bailout coming’, linked here and below, which hints at the same issue.
https://www.ft.com/content/ef4fb2b8-1b28-43f3-b34f-13e98c769e63
Lastly, and since I used his graph, I highly recommend Rory Johnston‘s substack on the crude oil and energy markets. You can read his latest on Shale Struggles linked here, or below:
https://www.commoditycontext.com/p/shale-struggles?utm_source=profile&utm_medium=reader2
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