U.S. Oil Dominance Is Coming To An End
- U.S.’ energy dominance agenda is dead as the country’s shale industry is looking at a steep production decline.
- The U.S. tight oil or shale rig count has fallen 69% this year from 539 in mid-March to 165 last week.
- U.S. oil import dependence is set to grow in the next couple of years.
U.S. energy dominance is over. Output is probably going to drop by 50% over the next year and nothing can be done about it. It has nothing to do with the lack of shale profitability or other silly memes cited by people who don’t understand energy.
It’s because of low rig count.
The U.S. tight oil or shale rig count has fallen 69% this year from 539 in mid-March to 165 last week. Tight oil production will decline 50% by this time next year. As a result, U.S. oil production will fall from to less than 8 mmb/d by mid-2021.
What if rig count increases between now and then? It won’t make any difference because of the lag between contracting a drilling rig and first production.
The party is over for shale and U.S. energy dominance.
Energy Dominance is Over
Tight oil is the foundation of U.S. energy dominance. The U.S. has always been a major oil producer but it moved into the top tier of oil super powers as tight oil boosted output from about 5 to more than 12 mmb/d between 2008 and 2019 (Figure 1).
Conventional production has been declining since 1970. It fell from almost 10 mmb/d in 1970 to 5 mmb/d in 2008.
Figure 1. Tight oil is the foundation for U.S. Energy Dominance.
Conventional production has been in decline since 1970. Tight oil boosted U.S. production to more than 12 mmb/d in 2019.
Source: EIA and Labyrinth Consulting Services, Inc.
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