Next year, US shale operators are expected to significantly reduce US drilling costs, Bloomberg reports.
Private oil and gas operators will cut their budgets by an average of 4% to $34.4 billion in 2024, according to Barclays PLC’s annual global spending survey. The cuts, the biggest ever forecast by a North American company, come after shale drillers increased spending by 15% this year.
After higher-than-expected production in 2023, the US shale industry is now slowing as reserves at leading drilling sites dwindle. Overall spending by North American manufacturers is projected to decline 1% next year. This comes after budgets expanded more than expected this year, Barclays analysts wrote.
The basis for Barclays’ assessment was Evercore ISI’s expense survey released earlier this month. It forecasts a 2% increase in US oil companies’ budgets next year. At the same time, oil production is likely to increase in 2024 by 150 thousand barrels per day. For comparison, this year shale production increased by 1 million barrels per day.
The unexpected jump in U.S. production this year is partly due to increased activity by private producers. They account for about half of the US drilling rigs and up to 40% of the country’s onshore production, according to Barclays.
By the way, Bloomberg previously called the growth in American shale production over the year from 12.5 million barrels to 13.3 million barrels per day “amazing.” It is “surprising” because the number of drilling rigs in 2023 decreased by 20%. The agency sees the reasons for this paradoxical situation in the active implementation of innovations by American shale producers.
It is worth noting that OPEC recently predicted that global oil production in countries outside the cartel could increase by 1.8 million barrels per day in 2023. Moreover, the United States will make a significant contribution to this process.
According to OPEC estimates, the increase in US liquid hydrocarbon production in 2023 should amount to 1.3 million barrels per day. In addition to the US, other growth drivers this year are expected to include Brazil, Guyana, Kazakhstan, China, Norway and Mexico.
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