Shale oil boom goes bust as expected production dips for first time in years
The government expects oil output through the most productive U.S. shale formations to discover its first monthly decline in additional than four years.
The U.S. shale oil boom that powered the nation’s highest crude oil production levels in decades is apparently scaling down due, partially, with a glut of supplies.
Oil output on the most productive U.S. shale fields is anticipated to drop off next month by 57 million barrels of crude daily from April to May, the U.S. Energy Information Administration said Monday. That might represent the first monthly decline in more than four years, based on Reuters.
The EIA forecasted which the seven shale formations — Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica — will produce a total of 5.56 million barrels of crude oil daily next month, down from 5.62 million barrels daily in April. While the most productive formation, Permian, will discover slightly higher output — by 11,000 barrels daily, to a single.99 million — output in the next-highest producer, Eagle Ford, will drop 33,000 barrels daily while Bakken’s output will decline by 23,000 barrels the following month.
(Fortune magazine recently wrote about oil boomtowns in North Dakota’s Bakken region, the location where the local economy is feeling the results of lower oil prices and might face a devastating blow if output there tails off considerably.)
In recent years, an oil boom in shale country helped U.S. crude production hit its highest levels in 40 years. The seven regions landed 95% of domestic oil production growth between 2011 and 2013, based on the EIA.
The EIA’s predicted decline in production comes after months of global oil prices plummeting caused by a worldwide oil glut. The price for a barrel of crude dropped by over fifty percent over the past 10 months, producing many oil companies to take their production levels amid falling share prices.