IEA WEO 2014: "UNLIKE DIAMONDS, SHALE GAS IS NOT FOREVER"
oil and to some extent deepwater resources in the Gulf of Mexico
continue to push overall US production higher, surpassing the previous
record for US output (11.3 mb/d in 1970) and setting a new high-water
mark of 12.5 mb/d in the latter part of this decade. After a plateau
above 12 mb/d until the late 2020s, production starts to fall back, as
tight oil and NGLs join conventional oil production on a downward trend.
By 2040, US production is around the 2013 level, some 2.5 mb/d below
its peak [...] In a similar way to tight oil, the future production of
shale gas in the United States (or elsewhere for that matter) is driven
by simple economics: the value of the recovered gas per well needs to
exceed the cost of drilling and completing the well. As more
production takes place, operators need to start drilling outside
the "sweet spots", the zones yielding the best recovered gas
volumes per well. As activity moves to zones of the shale formation
giving less gas per well, the economics deteriorate (assuming no
technology breakthroughs that cut costs or increase recovery per well),
eventually reaching the point at which the commercial economics fail.
This is what drives the peak and then the decline that we project for
tight oil production in the United States. So will the same happen for
shale gas? [...] It is only after the price becomes high enough for US
shale gas to become uncompetitive, either in international markets
against other sources of LNG or in the domestic market against other
sources of gas, such as deepwater Gulf Coast, that production peaks and
starts declining. In our projections, this peak just comes into
view before 2040. Its exact timing will vary with different
domestic and international gas prices and could easily be pushed
beyond 2040. But this serves as a reminder that, unlike diamonds, shale
gas is not forever."