Much to the chagrin of OPEC members, the U.S. shale sector has proven it has plenty of pluck when it comes to price fight.
American shale producers demonstrated their ability to survive and adapt to low oil prices after the market took a plunge three years ago. Since then, the industry’s resilience has been such that U.S. oil production is now at record levels – just under 9.7 million barrels per day – with government forecasts calling for a further 560,000 barrels-a-day of growth next year.
Efficiency gains, lower contractor costs, and technological improvements allowed most shale producers to withstand, and even thrive, under a new “lower for longer” price environment. But with many oil executives now openly talking about “lower forever” pricing, the question is whether shale producers can adapt once more, this time through a massive consolidation wave that will inevitably put more assets in the hands of the biggest companies.