Shale Oil Decline Raises Concerns as Firms Look Overseas
A new Dallas Federal Reserve report warns of a slowdown in oil production across Texas, New Mexico, and Louisiana, sparking industry debate over whether shale oil production is entering its twilight.
The U.S. Energy Information Administration (EIA) also projects a potential drop in U.S. oil output in 2026. If it happens, it would mark the first decline since 2021. Analysts attribute the expected decrease to falling oil prices and reduced drilling activity, particularly in the Permian Basin.
Shale oil decline shifts focus overseas
The Dallas Fed survey revealed many U.S. oil and gas executives now believe international projects will become more commercially viable. With capital spending expected to fall, 43% of exploration and production (E&P) firms anticipate a decline in third-quarter investments. Oilfield service companies also forecast a 42% drop in spending.
Some executives told the Fed that overseas opportunities may provide the best growth prospects as U.S. shale drilling slows.
Continental Resources invests in Turkey
One notable move is from Oklahoma City-based Continental Resources. Earlier this year, the company signed a joint venture with Turkish Petroleum Corporation (TPAO) to develop shale fields in the Diyarbakir Basin.
Founded in 1954, TPAO has long been a cornerstone of Turkey’s energy industry, spearheading hydrocarbon exploration and refining projects. The venture highlights the growing global shift as U.S. firms diversify beyond domestic shale plays.
Uncertainty ahead for U.S. shale oil production
The industry remains cautious as it awaits upcoming third-quarter earnings reports from major producers. The financial disclosures will confirm whether the predicted capital expenditure slowdown is materializing.
Executives stress that without stronger oil prices, U.S. production growth may stagnate, accelerating the shift toward international ventures.
Source: Reuters | Edited by Oklahoma Energy Today for clarity