The US is on the verge of a record collapse in oil production

11 months ago

The United States is facing a loss of up to a third of shale oil production due to a record reduction in the number of existing rigs, Bloomberg writes, citing data from ShaleProfile Analytics.

Due to the nature of the technology, companies need to constantly drill new wells as they are rapidly depleted. This is a weak point of the shale industry.

Manufacturers were on the verge of collapse due to collapse in demand for raw materials and, as a result, falling prices. Their restoration will take at least several years, notes The Wall Street Journal.

Shale oil production in the US this year may fall below five million barrels per day, for many companies losses will amount to 30-50 percent per year. At the same time, the country’s 15 largest shale companies have reduced their budgets for the development of new deposits by an average of 48 percent.

Earlier, the US Department of Energy predicted oil production in the country at the beginning of 2021 at the level of 13.5 million barrels per day.

US authorities separately fear that China will start buying up US shale companies in trouble. Amid “an unprecedented collapse of demand, ultra-low energy prices and catastrophic debt,” they look like an obvious goal, the analytical resource OilPrice notes.

The number of active oil and gas drilling rigs in the United States fell to a historic low and reached 318 units. Most medium and small producers of shale raw materials in the country were on the verge of bankruptcy, since oil production for them became unprofitable and did not allow servicing loans taken earlier.

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