f The Performance of Shale Industry in the US in 2016 - A Demonstration of Resilience

The US shale industry had experienced years of continuous growth: firstly shale gas growth from early 2000 years, and secondly shale oil growth from late 2000 years. In these developments, the industry benefitted initially from largely favorable economic environment, with high hydrocarbons prices.

However things change drastically regarding prices, as early as in 2008 for gas with a significant drop of the HH gas spot prices, and end 2014 for oil with a collapse of world oil prices. For the US shale industry, to adaptation to low prices environment was a question of survival.

Even if the last 7 years shale gas had already demonstrated its capacity to keep investing and to maintain high production in a relatively low price environment, many observers doubted on the possibility for shale oil to reduce costs, to improve efficiency, and therefore to maintain the level of investments (drilling and fracking) needed to mitigate the production decline in the US shale in a highly degraded price environment.

The « bubble » of US shale oil was expected by some observers to burst in 2016. However, the records last year demonstrate the resilience of the US shale oil industry. Indeed, severe adjustments took place, with bankruptcy, low access to credit, massive labor lay-off.

This paper aims at illustrating the various factors which contributed to the adaptation and the continuation of shale operations in 2016: lower costs for services, higher performance in drilling and fracking, focus on the more favorable shale basins.