Todd Bennington | Kingdom Exploration Media
The International Energy Agency is overly optimistic about the potential for shale production growth over the next decade, writes Oilprice.com editor James Stafford in an article published on Nov. 16.
Stafford cites a handful of reasons why shale may very well not live up to expectations, first noting the steep decline rates seen with shale as opposed to conventional wells.
“(Shale) drilling is like running on a treadmill—more and more wells need to be drilled just to keep production flat,” Stafford writes. “The extraordinary rate of drilling over the past few years means that the industry not only needs to keep going at that frenzied pace, but it needs to expand its rate of drilling to add more barrels.”
Other reasons shale may underperform, according to Stafford, include the fact that prime locations are given drilling priority, meaning it will be less desirable spots that will be left to drill as time goes on. Shale is also considerably less profitable than generally thought, regardless of where oil prices are at, Stafford claims, adding that the industry is being largely driven by what he calls “loose credit” and investors with unrealistic expectations.
In further support of his argument, Stafford goes on to cite skepticism on shale expressed by investment firm Morgan Stanley and an apparent trend seen among some petroleum companies to scale back drilling in favor of paying down debt, which will have a further negative effect on production growth.
The full article is available at: https://oilprice.com/Energy/Oil-Prices/The-IEA-Is-Grossly-Overestimating-Shale-Growth.html