Journal Article

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

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.

Keywords: Oil prices; Oil production;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 2015

Issue: Q I

Pages: 51-69