OPEC’s May report notes shale’s evolution

By Staff | May 22, 2018

OPEC released its world oil report for May, noting the transformation in U.S. tight oil production over the past five years.

Compared to last year, the U.S. shale industry has seen a 42 percent increase in investment, reaching nearly $140 billion. According to OPEC, the increase stems from accessibility to capital, cheap money and production hedging strategies. The world oil group also noted other key points to U.S. tight oil production.

-The estimated ultimate recovery rose on average by 20 percent for key tight oil plays from Q3 2016 to Q3 2017.

-The average well cost per lateral length fell by a substantial 35 percent between 2014 and 2017.

-U.S. shale breakeven prices in WTI have dropped by as much as 40 percent

As for future shale production growth trends, OPEC noted the following:

Fast-growing US tight oil production is increasingly faced with costly logistical constraints in terms of outtake capacity from land-locked production sites. These producers are also being pressured by shareholders demanding capital discipline and a return on their investments, which could come at the expense of increased disposable CAPEX.