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Global shale industry ‘on path to recovery’ after 8.1 percent production decline in 2020

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Global shale production has taken a drastic hit in 2020, where shale oil is expected to drop by 11.7 percent year-on-year and shale gas production may see a 4.5 percent fall, according to projections by GlobalData.

Global shale industry on a recovery path after 8.1 percent production decline in 2020, it said.

Market demand for oil and gas plummeted globally from March 2020, following the COVID-19 pandemic.

GlobalData’s latest thematic report, ‘Shale’, notes that the US led the global shale industry in 2019 – with over 98 percent share in shale oil production and over 78 percent share in shale gas production.

Apart from the US, shale oil and gas production is also carried out in Canada, China and Argentina. The effect of the COVID-19 pandemic has been particularly harsh on the US shale industry. As oil prices fell, shale operations became unviable in many US plays due to higher breakeven cost.

Ravindra Puranik, oil and gas analyst at GlobalData, said: “The US shale market has been vibrant since recovering from the 2014 price crash. Shale oil and gas production across major plays was generally on an upward trend in 2018 and 2019. However, the downturn this year has brought in unprecedented challenges to the shale industry. It has disrupted the recent momentum of the industry and may take years to recover.”

The shale industry, especially in North America, has faced the brunt of the economic downturn. This has led oil and gas companies involved in shale operations to reduce their planned CAPEX for 2020. In the Permian Basin alone, major shale drillers reduced their planned CAPEX for this year by over $18 billion.

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