After Texas pushed the United States over the last decade to become the world’s biggest oil producer last year, the heart of the shale revolution is starting to show fatigue.
The volume of crude being pumped out of Texas recently saw its first monthly dip in a year. Oil well productivity in Texas’s Permian basin — the country’s largest oil field — is falling, and the number of drilling rigs operating in the United States declined for six straight weeks before rebounding this week, Reuters reported.
Those indicators of future US oil production suggest that the massive surge in output over the past two years cannot continue unabated, and instead will shift to a near-term plateau in supply.
“For certain companies, production could start to flatline, even roll over” in the second half of the year, said James West, a senior managing director for research analysts Evercore ISI. “I think you will see revisions to the overall growth forecasts ... for US production.”
Evercore originally expected the land rig count to rise 6% in 2019; last week it revised its forecast to a 1% drop for the year.
The US Energy Information Administration in March trimmed its crude production forecast to an average of 12.3 million barrels per day for 2019 from 12.4 million bpd. That was the first time the EIA cut its production estimate since September.