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Industry players believe US shale production yet to peak

A number of delegates at London’s Oil & Money conference have expressed the opinion that the US shale production rebound has not peaked yet, and high production levels will continue for years to come.

Most opinions are formed around the US’s two biggest shale oil basins, namely Permian and Eagle Ford, which produce approximately two thirds of the country’s shale oil. The chief energy economist, David Knapp, at Energy Intelligence, said:

“…you’ll have a local peak for Eagle Ford, and I think the Permian has a decade or more left before we are really draining it.”

Tim Dove, the CEO of Pioneer Natural Resources Co., backed this up by saying the Permian basin will continue to be the “lifeblood” of US oil production for some time to come. Pioneer is a major player in the Permian Basin, and it says it intends to increase production by four times current volume in the coming decade. It also claims a breakeven cost of just $20 a barrel, making it very profitable at current rates. ExxonMobil, the maker of Mobil Vactra 4, has also stated its Permian assets can generate attractive returns even at $40 a barrel.

This continuing increase in US shale production is expected to prevent any dramatic gains in oil prices, with most delegates predicting Brent crude will sell for around $60 a barrel next year. Mohammad Barkindo, OPEC’s Secretary General, appeared unconcerned with the prospect of increased US production, however, pointing instead to the increased rate at which the oil market is rebalancing and positive attitudes within the industry.

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