Oil Frackers Brace for End of the U.S. Shale Boom
OIL MARKETS
Oil Frackers Brace for End of the U.S. Shale Boom
Limited inventory leaves the industry with little choice but to hold back growth, even amid high oil prices
By Collin Eaton
https://twitter.com/CollinEatonHC
Feb. 3, 2022 9:53 am ET
The end of the boom is in sight for America’s fracking companies. ... Less than 3½ years after the shale revolution made the U.S. the world’s largest oil producer, companies in the oil fields of Texas, New Mexico and North Dakota have tapped many of their best wells.
If the largest shale drillers kept their output roughly flat, as they have during the pandemic, many could continue drilling profitable wells for a decade or two, according to a Wall Street Journal review of inventory data and analyses. If they boosted production 30% a year—the pre-pandemic growth rate in the Permian Basin, the country’s biggest oil field—they would run out of prime drilling locations in just a few years.
Shale companies once drilled rapidly in pursuit of breakneck growth. Now the industry has little choice but to keep running in place. Many are holding back on increasing production, despite the highest oil prices in years and requests from the White House that they drill more. ... The limited inventory suggests that the era in which U.S. shale companies could quickly flood the world with oil is receding, and that market power is shifting back to other producers, many overseas. Some investors and energy executives said concerns about inventory likely motivated a recent spate of acquisitions and will lead to more consolidation.
Some companies say concerns about inventories haven’t factored into their decisions to keep output roughly flat. For several years before the pandemic, frustrated investors had pressured companies to slow production growth and return cash to shareholders rather than pump it back into drilling. Companies have promised to limit spending, though some executives recently said high prices signal a need for them to expand again this year.
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Write to Collin Eaton at collin.eaton@wsj.com
Write to Collin Eaton at collin.eaton@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the February 4, 2022, print edition as 'Frackers Brace for Shale Slowdown.'
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the February 4, 2022, print edition as 'Frackers Brace for Shale Slowdown.'
