Shale oil fracking faces more trouble next year

Recent developments and forecasts from the international energy/economic agencies indicate that the shale oil franking may also get into deeper troubles by 2016.

This indication appears not the best for the United States (U.S.) which is leading the shale franking technology, as its production tends to drop and the hope to capture the export market fades.

Indeed, the United States’ Energy Information Administration predicts that companies operating in U.S. shale formations will cut production by a record 570,000 barrels a day in 2016.

The International Monetary Fund (IMF) had also predicted that the crude oil prices will fall to about $20 per barrel next year, which would be making it more difficult for the franking companies to survive the business as cost of producing shale is estimated $50 per barrel.

Reports however, showed that the fracking outfits that make US oil-rich plains threw everything they had at $50-a- barrel crude in 2015. To cope with the 50 percent price plunge, they laid off thousands of roughnecks, focused their rigs on the biggest gushers only and used cutting-edge technology to squeeze all the oil they could out of every well.

Those efforts appears to have largely succeeded, but with the prices crashing to 11 year low at $37 per barrel, tough times are ahead for them to cope with costs.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC), in its latest world oil report, said U.S. shale oil production will be more resilient than previously expected.

OPEC said it expects U.S. crude oil production from shale deposits to increase from 3.8 million barrels per day in 2014 to 4.9 million bpd by 2023. By 2040, the trend will start to reverse as U.S. shale output falls to 4.2 million bpd.

“Although the updated forecast for the 2015 outlook shows that U.S. tight crude (oil production) will decline gradually over the long-term to 4.2 million bpd in 2040, in the 2014 outlook, it was projected at only 2.8 million bpd in 2040,” the report said.