US shale production predicted to hit nine million barrels per day by 2025
The US shale oil market is projected to see strong growth in the coming years, with production predicted to climb to nine million barrels per day by 2025, according to new research.
A market report from McKinsey found that under the base “Price Recovery” scenario – which would see the price of WTI crude hit $65-$70/bbl from 2019 onward – the Permian is expected to drive 20% per annum growth in drilling and completions through 2021.
Efficiency gains will have a significant effect on produced barrels per dollar spent—total market spend for drilling and completion will nearly return to 2014 levels, but production will have nearly doubled since 2014, said the study.
The growth of the US shale market was a key factor in causing oversupply that has seen the price of oil fall from $100+ in the summer of 2014, to less than half that figure today.
However, many shale oil plays are still economical given the low break-even price of many of the fields.
The report stated: “The Permian’s average core breakeven price for 2017 is less than $41/bbl. Low breakeven is enabling the Permian to remain profitable despite well cost increases of 30%.”
It added: “Key operational improvements are helping the shale oil industry endure low oil prices in this dynamic market environment. Despite possible short-term constraints of capital/rig/labor availability, the market is poised for a new chapter of growth, driven by activity in the Permian.”
The report highlighted key operational improvements—such as increased drilling efficiency, better completion designs, and high-grading—that are likely to help margins widen and enable drilling to become profitable beyond the most resource-rich basins.
The analysis found that operators have reduced drilling time by an average of five days while improving initial production by 33% from 2014 to 2016.
Hydrogen Map shows 57 projects are operational globally
Currently there are 57 projects operational and a further 58 will be in development by the end of 2021. Construction of another 92 are slated to begin in the next decade.
Western Europe and Asia Pacific, which account for more than 83% of known low-carbon hydrogen projects, are driving growth, but US projects are rising. The US is well positioned to lead the green hydrogen economy due to the abundant, low cost renewable energy sources needed to produce it, such as wind, solar, hydropower and nuclear, according to McKinsey.
A hydrogen production facility being built at the Tabangao refinery in Batangas, Philippines is slated to be the first to generate blue hydrogen, in which hydrogen is produced using fossil-fueled sources but the resulting carbon emissions are captured, stored or reused.
"Low carbon hydrogen and ammonia production is the key to decarbonising the hard-to-decarbonise sectors like transportation, industry and buildings”, said Pillsbury energy partner and Deputy Energy Industry Group leader Elina Teplinsky.
"This map will be a helpful tool for a broad audience of policy makers, industry participants and investors, sustainability analysts, advocates and journalists tracking the development of low-carbon hydrogen projects and encourage dialogue between those parties to further accelerate adoption of this transformational technology."
"With governments and enterprises worldwide increasingly prioritising decarbonisation goals, we are laser-focused on helping clients capitalise on the enormous opportunities that the ongoing energy transition presents,” said partner Sheila Harvey, who serves as firm-wide Energy Industry Group leader at Pillsbury and co-leads the firm’s Hydrogen practice.
Hydrogen practice group co-leader Mona Dajani, who heads Energy & Infrastructure Projects and Renewable Energy teams, said energy demand is driving significant innovation in the hydrogen space.
"Green hydrogen projects, which combine renewable power sources with hydrogen production, are unlocking new possibilities for regions previously constrained by weak grid connections and transmission bottlenecks and marking a crucial step in the development of the green hydrogen business case," she said.
New Australian clean energy storage startup Endua aims to build hydrogen-powered energy storage and deliver sustainable, reliable and affordable power.
Endua is backed by $5 million in funding, technology and industry expertise from CSIRO, Australia’s national science agency; Main Sequence, the deep tech investment fund founded by CSIRO; and Ampol, the country’s largest fuel network.