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Low Oil Prices To Slow, But Not Derail US Shale Boom

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Karen Boman, Rigzone

While it remains unclear what oil prices will look like in 2015, lower oil prices will only slow, but not end, the U.S. shale boom, industry analysts say.

Recent declines in North Sea Brent and West Texas Intermediate (WTI) crude oil prices – and the recent decision by the Organization of Petroleum Exporting Countries (OPEC) to maintain oil output – has caused speculation about whether the boom in U.S. shale exploration and production could continue.

The U.S. shale revolution has created in a boom in U.S. oil production over the past five years, growing from 5.4 million barrels of oil per day (MMbopd) in 2009 to 8.6 MMbopd today. Shale gas production has also soared from 59.3 billion cubic feet per day (Bcf/d) in 2009 to more than 75 Bcf/d today, according to a report by the Deloitte Center for Oil and Gas Solutions. By year’s end, U.S. oil production level should be very close to 9 MMbopd, U.S. Energy Information Administration Administrator Adam Sieminski said Nov. 18 at the Deloitte Oil and Gas Conference in Houston.

However, the recent slide in crude oil prices has prompted several shale companies to reduce their 2015 capital expenditures as their profit margins thin out, Reuters reported Dec. 1. Last month, the International Energy Agency reported that falling oil prices could cut investment in U.S. shale oil by 10 percent in 2015. Reuters reported Dec. 8 that ConocoPhillips would cut its 2015 capital budget by 20 percent, or about $3 billion, compared with 2014. The company said it would focus on Eagle Ford and Bakken shale, but defer significant investment on less developed shale projects in Canada, the Niobrara and the Permian Basin.

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