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Report indicates that US shale may have peaked

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A new report from Enverus subsidiary Enverus Intelligence Research (EIR) has concluded that the US shale industry will find it more difficult to grow production in future due to steepening decline curves over time.

The report’s author, EIR Managing Director Dane Gregoris, said the trend in growing production has calmed down in recent years after operators’ managed to double the average well’s production over the previous 10 years. He added:

“In addition, we’ve observed that declines curves, meaning the rate at which production falls over time, are getting steeper as well density increases. Summed up, the industry’s treadmill is speeding up and this will make production growth more difficult than it was in the past.”

The report points out that the rate at which production declines, known as the production decline curves, have steepened by more than 0.5% in every year since 2010. As well density increases, EIR expects these curves to continue steepening, and it says this could increase the breakeven price for operators.

This is of course not the first time that analysts have predicted the decline of the US shale industry, only for new technologies to trigger a resurgence. Darren Woods, the boss of oil and lubricant company Exxon Mobil, recently talked about promising new technologies for getting more of the oil out of shale wells. Currently the company only manages to extract about 10% of the resources in its shale assets, though he said this could be doubled over five years with the new technologies.

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