In the coming years, shale oil production in the United States will grow several times slower than before the coronavirus pandemic.
Experts from the Rystad Energy consulting company told RT about this.
According to experts' forecast, if oil prices remain close to $ 55-60 per barrel over the next few years, American shale producers will be able to increase production of raw materials annually by only 500-600 thousand barrels per day.
For comparison, in 2018-2019, oil production in the United States grew by 1.3-1.6 million barrels per day, and by the end of 2020 fell by 935 thousand. Such data are cited by the Energy Information Administration of the US Department of Energy.
“Shale operators are unlikely to increase production as rapidly as they did before 2020.
The fact is that large oil shale producers have changed their policy.
Now the priority of public companies has become more to reduce debt and increase profitability for shareholders, rather than increase production, ”explained Viktor Kurilov, an analyst at Rystad Energy.
Recall that in the spring of 2020, an unprecedented collapse in oil prices occurred on the global energy market.
Thus, for the first time in history, the cost of raw materials of the American WTI brand dropped to negative values for a short time and reached minus $ 37.6 per barrel.
In the summer, oil quotes were able to recover to the level of $ 40 per barrel, but at the same time, the production of shale raw materials was still unprofitable, experts say.
In these conditions, many companies had nothing to pay off their loans, which provoked a wave of bankruptcies.
From January 2020 to March 2021, 54 energy companies went bankrupt in North America, according to Haynes & Boone.
The total debt of enterprises amounted to almost $ 55 billion. Of this amount, about $ 29.5 billion fell on unsecured loans.
Although oil prices have now fully returned to pre-crisis and comfortable values for shale producers, the number of bankruptcies in the industry is still increasing.
Moreover, the number of oil rigs in the United States is still two times lower than at the end of 2019.
This is evidenced by the materials of the oilfield services company Baker Hughes.
“The US companies investing in shale production are heavily indebted.
Most of the fields were developed for new hydraulic fracturing technologies initially on credit and with risks.
At the same time, the calculation for a quick return was not justified, and it is now important for the owners of shale companies to quickly reduce the debt burden and recoup the costs already incurred, and not to generate new costs, "Pyotr Pushkarev, chief analyst of TeleTrade Group, explained in an interview with RT.
Moreover, as noted by Rystad Energy experts, at the moment small and medium-sized shale operators are increasingly afraid of tightening industry regulation from the new US administration.
The relevant initiatives were previously voiced by the head of the White House, Joe Biden.
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"Excessively tight regulation - the rapid cancellation of incentives for the oil industry and the imposition of high taxes on carbon dioxide emissions - may lead to the fact that shale production will never recover to its previous levels of early 2020," said Viktor Kurilov.
At the same time, as the expert emphasized, against the background of the recovery of the global economy from the consequences of COVID-19, fuel consumption in the world will grow steadily in the coming years.
Since the rate of production of raw materials in the United States will decrease, the countries participating in the OPEC + deal will be able to cover the growing volume of world demand for oil, the expert said.
“Since the beginning of the pandemic, the US share in world oil production has already declined from 15% to 14% and is unlikely to return to its previous values over the next few years.
By mid-2022, when production by OPEC + countries is expected to recover, the share of the United States may still temporarily decrease to 13.3-13.5%, "Kurilov added.
Recall that the OPEC + agreement includes 23 oil-producing countries, including Russia.
As part of the deal, governments temporarily restrict the production of raw materials to achieve a balance between supply and demand in the global hydrocarbon market.
Such a policy should keep oil prices from sharp fluctuations.
As Valery Emelyanov, an analyst at Freedom Finance Investment Company, suggested in an interview with RT, in the future the United States will still have the opportunity to win back the bulk of the losses incurred.
At the same time, for a certain time, the country may still concede its market share to such large OPEC + participants as Russia and Saudi Arabia, the expert said.
“Reducing pressure from the US shale industry with relatively favorable oil prices will allow Russia and other traditional producing countries to recover faster from the economic downturn in 2020. At the same time, our budget deficit will decrease faster than it was expected a year or six months ago. With such a combination of circumstances, Russia's GDP this year may well grow by 4%, which has not happened for nearly ten years, ”concluded Yemelyanov.