The era of falling breakeven costs in the U.S. shale patch may soon come to an end, and a new era of higher costs and depleted core inventory could reduce America’s sway in meeting the global demand growth.
That’s the latest take from analytics firm Enverus Intelligence Research, which said in a new report this week that the marginal cost of U.S. oil supply is projected to rise from $70 per barrel WTI price at present, to as much as $95 per barrel by the mid-2030s. The expected $15 per barrel surge in costs would be driven by a shift from economically proven inventory to more speculative locations as the core inventory is depleting, according to Enverus Intelligence Research (EIR).
Soaring Cost, Waning Global Influence
The looming depletion of North America’s core oil and gas inventory will have implications for global energy markets, especially the U.S. ability to meet global demand, Enverus’ report says.
“North America’s dominance in supplying global oil demand growth is waning,” Alex Ljubojevic, director at EIR, said in a statement.
“Over the next decade, its contribution to consumption growth is expected to fall below 50% — a stark contrast to the previous 10 years when it supplied more than 100%,” Ljubojevic added.
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Still, the Permian basin in West Texas and New Mexico and the Canadian oil sands are and will continue to be North America’s lowest-cost sources of scalable oil supply, Enverus reckons.
The oil sands would benefit from strong Western Canadian Select (WCS) prices and sunk infrastructure costs, and additional takeaway infrastructure capacity could unlock significant upsides to the estimates of Canadian oil production growth. Currently, Enverus expects Canada’s oil output to rise by 450,000 barrels per day (bpd) by 2030, up from an expected record-high for 2025.
The U.S. shale patch, however, will have to contend with flatter growth curves going forward amid oil prices close to current breakevens and depleting core inventory, which will make companies change investment strategies.
“As core shale oil inventory in the U.S. depletes, the industry is entering a new era of higher costs and more complex development. This shift will reshape the cost curve and redefine investment strategies across the continent,” Enverus’ Ljubojevic said.
U.S. Shale Slows Drilling
Amid lower oil prices this year, the U.S. shale patch is in a wait-and-see mode, expecting to ride the price decline with minimal tweaks to strategies. U.S. oil producers are trimming capital expenditure budgets, relying on efficiency gains from current drilling activity to keep output levels.
American oil production is rising, due to the lag between oil price slides and drilling, but large shale producers are already calling the peak of oil output, despite the Trump Administration’s best efforts to support the fossil fuels industry.
For example, efficiency gains, as well as synergies from the Endeavor merger and lower service costs, allowed Diamondback Energy to reduce its 2025 capital budget by another $100 million, or about 3%, from the prior midpoint, to $3.4 – $3.6 billion.
“With volatility and uncertainty persisting, we see no compelling reason to increase activity this year,” CEO Kaes Van’t Hof told shareholders in a letter in early August.
Since the Q1 letter to shareholders, Diamondback “Continue to believe that, at current oil prices, U.S. shale oil production has likely peaked and activity levels in the Lower 48 will remain depressed,” Van’t Hof said.
Higher costs and continued uncertainty, including with U.S. trade policies, led to another decline in oil and gas activity in the Permian, executives from producers and services firms said in the latest Dallas Fed Energy Survey published this week.
In the survey, most executives, 57%, estimate that regulatory changes since the Trump Administration took over in January 2025 have reduced their firms’ breakeven costs for new wells by less than $1 per barrel. An additional 25% estimate reductions between $1 and $1.99 per barrel, while none of the large E&P firms have seen more than $5 per barrel cost reduction, according to the executives polled.
Moreover, most executives report they have delayed investment decisions in response to heightened uncertainty about the price of oil and/or the cost of producing oil, the survey showed.
“The administration is pushing for $40 per barrel crude oil, and with tariffs on foreign tubular goods, [input] prices are up, and drilling is going to disappear. The oil industry is once again going to lose valuable employees,” one E&P executive commented to the survey.
Another one outright blamed both the previous and current administrations for breaking the U.S. shale business.
“What was once the world’s most dynamic energy engine has been gutted by political hostility and economic ignorance,” the executive said.
The previous administration vilified the industry and cheered when Wall Street walked away from shale, they added, but noted that “Now the current administration is finishing the job.”
“Guided by a U.S. Department of Energy that tells them what they want to hear instead of hard facts, they operate with little understanding of shale economics,” the executive said.
“Instead of supporting domestic production, they’ve effectively aligned with OPEC—using supply tactics to push prices below economic thresholds, kneecapping U.S. producers in the process.”
The shale patch consolidation has been fueled by the collapse of capital availability. This consolidation, in turn, is pushing out independents and entrepreneurs who once defined the shale revolution, according to the executive.
“In their place, a handful of giants now dominate but at the cost of enormous job loss and the destruction of the innovative, risk-taking culture that made the U.S. shale industry great.”
By Tsvetana Paraskova for Oilprice.com
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