Shale Oil Boom Shows Signs of Slowing

The shale boom that has brought record levels of oil production to the U.S. in recent years isn't going bust anytime soon, but it may be quieting down. According to the U.S. Energy Information Administration, total U.S. oil production increased by less than one percent during the first half of 2019, compared with a nearly 7% rise during the same period a year ago. The decline in growth comes as some companies have cut back on drilling and operational costs, while some of those booming shale finds have dried up.

The slowdown in shale drilling is a real phenomenon, according to Adam Cooper, CEO of oil services company Quest Automated Services. "Over the last 8 months to a year we've seen the drilling rig count slowly decline, and that decline has slowly started to affect our numbers," he tells KTRH. "With the rig count going down, what that means is we're no longer drilling for as much new oil as we were previously."

Cooper explains that one of the big issues with shale wells is they have a shorter lifespan than traditional oil wells. "These (shale) wells come on really hard for 6 to 12 months, and once the decline begins, they fall off fast," he says. Companies have also had issues with the costs associated with equipment and labor needed for new drilling and exploration, along with problems related to drilling some wells too close together.

The good news is that companies will inevitably have to find new wells to replace those that aren't producing anymore. "As production goes down, they're going to have to increase drilling, which should occur over the next 12 to 18 months," says Cooper. "And that should increase the jobs back up."

Despite the slowdown, U.S. oil production is still on track to hit a record 12.2 million barrels per day on average this year, up from an average of 11 million barrels per day in 2018.

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