Shale Oil

Despite the ongoing rise in oil demand and prices, independent US shale producers are continuing to maintain capital spending discipline and focus on returning cash to shareholders, minimizing the ongoing rise in US shale output, despite calls from countries around the globe for more crude to be added to the market to meet growing demand.

Amid the ongoing rise in oil prices and demand, output from US shale plays is again on the rise.

Bahrain's Oil and Gas Minister Sheikh Mohammed bin Khalifa al-Khalifa said on Oct. 19 that the country remains on pace to bring online its offshore shale reserves located in the extensive Khalij al-Bahrain reservoir off its west coast by around 2023.

As part of the plan to boost domestic oil and gas output, executives with CNPC subsidiary PetroChina told Reuters that the company plans to begin producing oil from the shale formations in the Gulong area in its major Daqing oilfield cluster (which is estimated to hold 9.8B bbl of oil) in 2025.

In a statement issued on Sept. 20, ConocoPhillips (COP) announced that it had agreed to acquire Royal Dutch Shell's shale assets in the Permian Basin for $9.5B in cash.

According to the EIA, oil output from the seven major US shale plays will rise by about 66K b/d next month to 8.1MM b/d, as drilling activity across the major US shale formations continues to rise amid increasing oil demand and prices.

After a "blockbuster" level of merger and acquisition (M&A) activity within the US shale patch last quarter totaling $33B worth of deals, M&A activity within the US shale patch is said to have "slowed to a trickle" this quarter due to volatility returning to oil markets on the Delta coronavirus variant combined with uncertainty over the Federal Reserve's future policy course.

Despite US shale producers continuing to keep spending subdued despite rising oil demand and prices, shale output is on the rise as well productivity gains deliver more supply from less investment.

On Aug. 25, China's news agency Xinhua reported that a shale formation with an estimated 1.27MM mt (9.03MM bbl) of oil was discovered in the onshore Daqing Oilfield, where China National Petroleum Corp. (CNPC) has been looking to increase shale output.

According to the EIA's monthly drilling productivity report released on Aug. 16, US shale output is set to rise to 8.10MM b/d next month, the highest monthly US shale output since last April.