The Peak Oil Myth is Back Again (and It’s Still a Myth)

There’s a new narrative – peak shale, even in the Permian. The story goes that the easy targets have all been drilled, and the harder targets aren’t profitable at today’s prices. But today’s easy targets were hard targets just a few years ago. Evidence from decline curves shows that working shale plays are as productive as ever. The skeptics, as always, are blind to the roles of operating experience and technology improvement in getting more oil out of rocks profitably. Much has been made of EOG’s worries about shale. Its concerns arise from its experience in the Eagle Ford, yet they are being extrapolated to the premier Permian shale play. EOG itself is investing heavily in other shale plays, including the formerly difficult Utica which it now calls a “little Permian” – showing that business and technology dynamism can always reinvigorate the drilling game. Trump’s deregulatory policies are lowering costs and increasing demand at the same time. We reiterate our forecast for a price range of $60 to $80 Brent.