US Shale Bonanza Means Oil Production At A 50-Year High
As shale oil makes a comeback, the United States could outstrip Russia and Saudi Arabia to become the world’s biggest oil producer. But is this new boom in black gold sustainable?
Three years ago, the US shale oil boom appeared to be over, apparently starved to death when OPEC flooded the market with cheap oil.
As prices plummeted from over $100 (€81) to $40 a barrel, shale oil production — the drilling and hydraulic fracturing (fracking) of unconventional oil deposits found in shale formations — quickly became uneconomic.
In just under a year, more than 130 US shale producers, from Pennsylvania to North Dakota, declared bankruptcy, leaving tens of thousands of American oil workers without jobs.
But the highly cyclical nature of the energy sector, and a rebound in oil prices to more than $60 a barrel, have helped revive the fortunes of most US shale producers almost as quickly as they stalled.
Last month, the US Energy Information Administration predicted that American oil output would soon surpass 10 million barrels per day (bpd), eclipsing a previous record in 1970 when conventional US oil production peaked.
Next year, the US is on target to outstrip Russia and Saudi Arabia to become the world’s largest oil producer, and will become a net energy exporter within five years, the Paris-based International Energy Agency has forecast.
Adapt to survive
One reason credited with helping the US shale sector quickly reverse its fortunes was the ragged determination of producers. Many of them kept pumping oil despite going bust, while smarter drilling techniques boosted their chances of survival.