Roughly 4,200 miles from the heart of the Bakken Shale, the future of US shale oil became the focus of the Platts Global Crude Oil Summit in London Tuesday.
There was sharp disagreement between analysts over whether US shale production had peaked, where the supply bottom may be, how quickly production might ramp up and even if American producers have been resilient in the face of low prices.
While analysts said US shale has played a major role in the current global supply glut, it is unclear where US production may be headed going forward.
Christof Ruhl, global head of research with the Abu Dhabi Investment Authority, told the summit the path of US oil supply is particularly unknown since the shale renaissance is so new.
"Nobody knows, because we have literally never been here," said Ruhl.
US crude production, which reached a recent peak of 9.7 million b/d in April 2015, is expected to average 8.6 million b/d this year and fall to 8.19 million b/d in 2017, the US Energy Information Administration said Tuesday.
Paul Hornsnell, global head of commodities with Standard Chartered, said that projected, dramatic decrease in US supply shows that producers have hardly been resilient.
"There's the narrative of the little [US] oil man standing up to the force of OPEC producers," Hornsell said. "But I don't think it holds up."
But EIA may be overstating the decline in US production, according to Per Magnus Nysveen, head of analysis with Rystad Energy.
Nysveen expects production to fall just 500,000 b/d from 2015 levels, due to improved rig efficiency and improved completion intensities. In addition, lower service costs and high grading have helped push the average US shale breakeven price from $80/b in 2012 to about $40/b in 2016.
Nysveen said these improvements will likely level off and breakeven prices will climb back above $60/b as the market rebalances, where onshore may become competitive with US offshore production.
How quickly supply can ramp up is unknown, but Ruhl said it would likely be quicker than many expect, "measured in months, not years."
In addition, the potential rebound could vary by shale play.
"Not all shale is created equally," said Christopher Wheaton, a director with Allianz Global Investors. "Some bits in the Bakken will never come back because they will be displaced by bits of the Permian."
Many analysts said they expect the Bakken to face the largest hurdles in supply recovery, mainly due to infrastructure and geographic constraints.
Nysveen said Bakken production fell by about 5,000 b/d in March from February, to about 1.113 million b/d. North Dakota officials are expected to release official statistics for March later this week.
While the supply level is down from a peak of 1.23 million b/d in December 2014, North Dakota is expected to maintain supply flows of more than 1 million b/d until late this year due to efficiency improvements and targeted drilling.
