The prolonged period of decreasing breakeven costs for U.S. shale oil production may be nearing its conclusion. Current trends suggest we may be entering a phase characterized by increased costs and dwindling core inventories, which could diminish the United States’ influence in satisfying the growing global oil demand.
According to a recent report from Enverus Intelligence Research, the projected marginal cost of U.S. oil supply, currently around $70 per barrel of West Texas Intermediate (WTI), is anticipated to escalate to $95 per barrel by the mid-2030s. This $15 increase is attributed to a transition from economically viable inventory to more speculative drilling sites as the most productive core inventory becomes increasingly depleted.
Increasing Costs and Diminished Global Influence
The expected decline in North America’s core oil and gas resources is likely to have significant ramifications for global energy markets, notably reducing the U.S. capacity to address growing international demand, as highlighted in the Enverus report.
“The dominance of North America in fulfilling the global oil demand is on the decline,” stated Alex Ljubojevic, director at EIR. “Over the next decade, its contribution to consumption growth is projected to drop below 50%, contrasting sharply with the past decade when it accounted for over 100%.”
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Despite these challenges, the Permian Basin in West Texas and New Mexico, along with the Canadian oil sands, are projected to remain the most cost-effective sources of scalable oil supply in North America. Enverus suggests that strong pricing for Western Canadian Select (WCS) and existing infrastructure investments may lead to substantial increases in Canadian oil production. Currently, the firm forecasts an increase of 450,000 barrels per day by 2030, building on expected records for 2025.
In contrast, the U.S. shale sector is likely to experience more gradual growth trajectories, facing the dual pressures of prices hovering at current breakeven points and diminishing core inventory. These conditions will compel industry players to adapt their investment strategies accordingly.
“As the core shale oil inventory in the U.S. is drawn down, the industry is transitioning into a new landscape marked by heightened costs and more intricate developmental challenges. This evolution will transform the cost structure and redefine investment approaches across North America,” commented Ljubojevic.
U.S. Shale Adjusts Drilling Strategies
In light of lower oil prices experienced this year, U.S. shale companies are entering a cautious phase, choosing to retain existing strategies while making minor adjustments as necessary. Many producers are slashing their capital expenditure budgets and relying on efficiency gains from ongoing drilling operations to maintain current production levels.
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