Short Sand Supplies Will Slow Growth of U.S. Oil Output

Shale oil producers in the United States and Canada are likely to stick to their slow growth plans this year because they lack the sand, steel, drilling rigs and pressure-pumping capacity required to grow faster, according to the Journal of Petroleum Technology.

Demand outstrips supply in those four key sectors and is expected to remain the case into 2023 because service companies are not able, or willing, to pick up the cost of rapid growth.

“The supply chain issues we are seeing now are one of the main limiting factors in US shale growth” said Ryan Hassler, senior analyst covering United States and Canadian shale for Rystad.

The energy data and consulting firm said U.S. onshore producers will add 1 million B/D of production this year, which is about 500,000 B/D short of what would have been possible were it not for the supply shortages.

With increased demand and rising prices, there’s some growth in sectors such as sand supplies, where shortages at the start of the year offered an early warning of a surprisingly tight market ahead after seven years of mostly down markets.

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