The shale oil revolution is soon over. A global oil supply shortage in 2024?
(This blogpost is written primarily for Peak Oil pundits, and is a continuation and an update of the following blogposts on my former blog Forest Man, and on this blog:
When will US shale oil peak?, 10.2.2023.
When will the Permian basin shale play peak?, 28.4.2023)
The shale oil revolution is soon over
There has in the last half year been written a lot about how we are at the end of, or at the very last chapters of the shale oil revolution, the "Shale Boom" or "Fracking Boom" that began somewhere around 2010 in earnest, as a response to the end of cheap oil, when conventional oil output peaked. I have reported about many such articles in the blogposts above, but here are some additional and newer articles:
Column: Is the U.S. shale oil revolution over?, by John Kemp on Reuters, on November 23, 2022.
Shale Drillers Are Auctioning Off Rigs at Bargain Basement Prices, by Alex Kimani on www.oilprice.com, on May 17, 2023
IEA: Oil Bears Are Disregarding An Imminent Supply Shortage, on www.oilprice.com, by Tsvetana Paraskova, on May 16, 2023
Is the American Shale Revolution Coming to an End?, by Nomi Prins on Rogue Economics, on May 10, 2023.
From this last article: "These days, various oil field experts are saying the U.S. Shale Revolution is over."
My comment: It is true, and it has been so for a long time. But the shale oil locomotive just seems to puff forward with great speed. Already in 2013 even IEA, wellknown for its optimism in energy predictions, predicted that Shale Oil would peak in 2020. See the article "IEA: Shale Boom is Only Temporary, we’ll Soon be Relying on Middle East Again", by Joao Peixe, on November 12, 2013, on www.oilprice.com.
U.S. Shale Boom Shows Signs of Peaking as Big Oil Wells Disappear, in Wall Street Journal,
A global oil supply crunch in 2024?
In the article "Oil To Face "Serious" Supply Problem In 2024 As Production Capacity Runs Out, Goldman Warns", by Tyler Durden, on Zero Hedge, on Feb. 06, 2023, we read the following warnings:
"So has the recent setback dented Goldman's optimism? Not at all: in fact, according to Goldman chief commodity strategist, not only will oil rise back above $100 a barrel this year, it will rise much more in 2024 when it will face a serious supply problem as spare production capacity runs out."
“Right now, we’re still balanced to a surplus because China has still yet to fully rebound,” Currie said. Capacity is likely to become a problem later this year when demand outstrips supply, he said. “Are we going to run out of spare production capacity? Potentially by 2024 you start to have a serious problem.”
See also the articles "The UAE Is Worried About An Oil Supply Shortage In 2024", b
"Low oil prices are here to stay as the US shale oil revolution goes global", published on October 4, 2015 on The Conversation, by Marian Radetzki and Roberto F. Aguilera.
Did the shale oil revolution go global? No. Many tried, countries like Colombia (see this article), but failed. And what about the oil price? It has for a long time been four times the price that was usual before Peak Conventional Oil 2005, the cheap price that pertained for a long time before we ran out of cheap oil. Oil is expensive now, and will always be in the future, and high inflation and the destruction of purchasing power has made matters even worse.
A decline from the peak plateau of "All Liquids" in 2025 at the latest?
Because of all the information above, it seems reasonable to expect a beginning decline from the peak plateau that "All Liquids" (everything that is counted as "oil") is on right now (102-103 million barrels of oil per day), in 2024 or in 2025 at the latest. And it is also reasonable to expect an abrupt decline when the decline begins, so big is the energy bubble (1). Also Steve St. Angelo has expressed similar thoughts.
It can be good to remind you again of this recent forecast by Dennis Coyne on the Peak Oil Barrel blog, from this blogpost:
Where are we headed regarding the "All Liquids" production (the graph above is not "All Liquids", it's just Crude + Condensate?) Will the decline of "All Liquids" and Crude + Condensate begin in the beginning of 2025?
(1) see the recent article "U.S. Shale Production Is Set For A Rapid Decline", b
My comment: Mark the words: "From January of 2023, both DUC withdrawals and drilling have declined and shale output has essentially flatlined around 9,300 mm BOPD,"
Can this be true? Has the Shale Oil peaked? We will know after some time.
More from the article by Messler above:
"Daily shale output is nearing an inflection point and may soon start a rapid decline, that will be impossible to reverse, absent a huge increase in the rate of drilling new wells that cannot be sustained in today’s market."
My comment: Will Shale Oil and its finances survive the banking crisis, which only gets worse? This will be interesting to follow. What we know is that upstream investment has underperformed for a long time in the Oil Industry at large, and at last this industry must reap what it has sown.
