Shale gas production in the United States is expected to reach 79 Bcf/d in 2040, while tight oil output could exceed 7 million b/d, according to EIA projections – provided that technological progress helps bring down drilling costs and oil prices stabilise.
The surge of US unconventional oil and gas output in 2010-15 was largely technology-driven. More efficient equipment reduced drilling costs in major shale plays, such as the Bakken, Marcellus, and Eagle Ford.
Use of more efficient hydraulic fracturing techniques and the application of multiwell-pad drilling, as well as changes in well completion designs, is expected to allow producers to recover greater volumes from a single well.
As oil prices recover, oil production from tight formations is forecast to increase. By 2019, Bakken oil production is projected to reach 1.3 million b/d, surpassing the Eagle Ford to become the largest tight oil-producing formation in the US.
Appalachian shale plays resilient to lower gas prices
Natural gas production from shale gas plays in 2015 accounted for 37.4 Bcf/d, or 50% of total U.S. natural gas production. Unlike production from tight oil, which declines in the near term before increasing later in the forecast period, natural gas production from shale gas plays is expected to increase through 2040 in the AEO2016 Reference case.
Marcellus and Utica, the two Appalachian shale gas plays, benefit from shallower geologic formation depths and proximity to consuming markets. Both Appalachian plays have remained resilient to the low gas prices and will continue to drive total US production in the long term.
Shale gas from these plays is expected to reach more than 40 Bcf/d by 2040 – just over half of the country’s total shale gas output.
Shale gas output largely unaffected by oil price
Though oil price fluctuations have a significant effect on shale oil production, EIA analysts suggest that shale gas production increases in both the High and Low Oil Price cases in the AEO2016.
By 2040, the global benchmark Brent crude oil spot price averages $73/b in the Low Oil Price case, $136/b in the Reference case, and $230/b in the High Oil Price case. In the High Oil Price case, drilling activities increase tight oil production through 2026, after which it begins to decline. The opposite is true in the Low Oil Price case, where tight oil production declines slightly before increasing after 2026.
Technological improvements make all the difference. In EIA’s resource and technology side cases, the estimated ultimate recovery for shale gas and tight oil wells is 50% higher or 50% lower than in the Reference case. By 2040, these cases result in the far greater differences from Reference case production values than do the alternative oil price cases.