Amid Low Prices, US Oil Output May Be Nearing Peak

Business News/Analysis, Energy, Federal Agency/Executive Branch, Opinions, Saudi Arabia

June 8, 2015

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by Jay Fitzgerald (Boston Globe) Is America’s energy boom coming to an end? As companies shut down oil- and gas-drilling rigs and lay off thousands of workers who toiled in shale fields in North Dakota, Texas, and elsewhere, many analysts are wondering whether the United States is closing in on an oil and natural gas production peak.

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The US Energy Department recently projected that US oil production will peak as soon as 2020 — just five years from now — at about 10 million barrels a day, up from 9 million today and 6 million five years ago. Production then would gradually decline over the coming decades, meaning fewer oil and gas field jobs and higher energy prices.

If those projections are right, it means the domestic oil industry and American consumers and businesses are enjoying their best days now, energy analysts said. Natural gas production is expected to peak in 2040.

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“It’s not so much that the oil will run out, but whether the economically viable oil will run out,” said Martin Tillier, chief market strategist for OilPrice.com, an energy news and analysis website. “At some point, taking it out of the ground will cost too much and cease to be economically viable.”

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Joe Petrowski, managing partner at Mercantor Partners, a Framingham energy investment and management firm, said drilling technologies will keep improving, thus allowing drillers to extract ever more oil and gas from shale fields at lower costs.

Petrowski said US output of both natural gas and oil will remain high for decades to come, justifying expensive infrastructure projects such as building new gas pipelines in New England.

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But Greg Cunningham, director of clean energy and climate change at the Conservation Law Foundation, said the prospect of the US hitting peak production in five or even 25 years should make people pause about spending billions of dollars on projects such as pipelines that may end up not delivering as much fuel as expected.

He said that businesses and consumers who use natural gas will end up paying the bill for these projects through higher rates. “Ultimately, the ratepayers could be left holding the bag.” READ MORE and MORE (National Review) and Drilling Rig Slides June 2015 (Robert Kozak)

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