The shale revolution is on hold as a global oversupply of oil and low prices continue to haunt producers.
Related: OPEC Challenges Bakken Shale Drillers
In December, OPEC announced that it would not decrease production in order to curb the falling price of crude. OPEC continued this strategy throughout the year, which has caused major economic consequences, including impacting the US shale industry’s output.
Since April, oil production in the major shale plays has decreased sharply, with the Eagle Ford being the biggest loser. The Eagle Ford has lost 300,000 barrels a day and other major plays also experiencing a decrease include the Bakken Shale in North Dakota, the Utica Shale in Ohio and the Niobrara in Colorado, Kansas, Nebraska and Wyoming. Total production from shale plays fell by 350,000 barrels.
But despite the oil glut and sharply depressed crude prices, U.S. producers have hardly been knocked out and have managed to increase their efficiency and productive capacity throughout the year.
“The resilience of U.S. shale producers has surpassed all expectations as they have wrung extra efficiencies out of their operations and pulled rigs back to the most prolific sections of existing plays. The shale sector’s ability to cut costs and sustain their output in the face of plunging prices has been extraordinary and testament to the entrepreneurial spirit and technical skill of the independent producers.”
OPEC has effectively managed to reset supply in the markets to pre-shale oil boom levels, but the productive capacity still remains and is likely to restart as soon as crude prices climb.