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What could lower prices mean for U.S. oil production?

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Abstract

U.S. oil and natural gas production has grown significantly since 2005, reflecting a move toward shale gas and tight oil extraction. Since 2011, the most productive tight oil and shale gas fields accounted for nearly all of the growth in U.S. energy production, due largely to extensive use of hydraulic fracturing and horizontal drilling. High energy prices made these costly technologies profitable to apply on a large scale. However, oil prices and rig counts declined sharply in 2014, calling into question whether the boom in U.S. oil production can continue. Nida ak?r Melek examines how falling oil prices, declining rig counts, and gains in rig and well efficiency could affect 2015 oil production. Her analysis suggests production could decline from 0.7 to 8 percent in 2015 despite highly productive new wells and increasing rig efficiency. For production to increase in 2015, rig efficiency and initial well production would need to increase markedly or the decline in rig counts would need to halt.

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  • Nida Çakır Melek, 2015. "What could lower prices mean for U.S. oil production?," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 51-69.
    • Handle: RePEc:fip:fedker:00026
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    1. Höök, Mikael & Hirsch, Robert & Aleklett, Kjell, 2009. "Giant oil field decline rates and their influence on world oil production," Energy Policy, Elsevier, vol. 37(6), pages 2262-2272, June.
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