Shale activity expansion comes at cost of accelerated base decline in the U.S. Land

September 21, 2018

Significant expansion of shale activity in the Permian Basin and other U.S. Liquid plays comes at the cost of accelerated base decline. Base decline shows how quickly oil production falls in the first month if no new completions are turned-in-line. In pre-unconventional oil era (2006-2009), U.S. Land oil base decline was observed at 50-60 thousand bpd. As of 2H 2018, U.S. Land needs to add more than 500 thousand bpd of new oil monthly just to keep production flat. U.S. oil production exhibits all-time high YoY growth of 1.6 million bpd as of June 2018, but acceleration in base decline will eventually lead to the decay in the pace of production additions. Material increase in shale investments is needed in 2019 to maintain YoY growth above 1 million bpd through the end of 2019.

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