Incremental Oil Production Growth… Shale versus Offshore …

Interesting graph from Oceaneering that shows the growth of incremental production. Like all these charts they need to be viewed as directionally correct only, but it makes clear the scale of the change that shale has wrought on the offshore industry.

That brown/ shale area would simply not have existed 4 years ago and ties in with my argument about shale becoming an important industry narrative which drives how actual investment decisions are made in companies. There are large questions about shale productivity (depletion rates etc), I am not  geologist or well engineer so can offer no insight into this from a technical perspective, but the economist in me is an inveterate technical optmist and I think the investment resources being signalled towards this form of E&P activity will lead to increased productivity and recovery in the future.

Many investors into offshore in prior to 2014 saw that brown area as one that offshore would have covered. Clearly offshore production will still remain an important part of the energy supply chain, but only niches within it will be profitable as opposed to the whole market uplift that drove the previous boom. Services over assets would be a good general rule. As would another point I have made previously that offshore developments are likely to be driven by a smaller number of mega developments.

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