US shale oil production is expected to peak in the early 2030s as the industry exhausts more of its lower-cost drilling inventory, increasing the importance of Canada in sustaining North American energy supplies, Enverus Intelligence Research strategists said in a note on Tuesday.
Enverus analysts said US oil output is forecast to decline to 12.7 million barrels per day by 2035 from 13.7 million b/d in 2026, while Canadian production is projected to rise by about 1.5 million bpd to 7 million bpd over the same period. Overall North American oil production is expected to remain flat over the next decade.
The Permian basin will remain the main source of US drilling activity into the 2040s, but producers will increasingly have to develop higher-cost resources as low-cost inventory dwindles. Enverus forecasts the marginal cost of US oil supply will rise to about $90 per barrel by 2035 from about $70/bbl currently, on a PV-50 basis.
Enverus forecasts that the US has about 17 years of low-cost oil resource at current production rates, compared with nearly 53 years for Canada, using a sub-$50-a-barrel WTI PV-10 breakeven threshold. The figures point to a longer resource runway for Canada even as US shale remains a cornerstone of continental supply.
Canada's ability to increase output will depend on investment in infrastructure and upstream development. Enverus said that several crude oil takeaway projects announced or advanced over the past year could add about 3 million b/d of potential export capacity from the Western Canada Sedimentary Basin, while additional oil and gas pipelines and LNG export infrastructure will be needed.