When OPEC points at U.S. oil producers, it always blames the shale drillers for oversupplying the world market.
But while shale is in resurgence, the real source of recent growth has been the offshore drillers in the Gulf of Mexico.
According to Bank of America Merrill Lynch, U.S. oil production growth between September and December was almost entirely the result of offshore wells, which increased production by 220,000 barrels a day in that period.
Offshore projects are much more long-term investments. They are far more costly to develop and take years to get started. "Those projects have an inertia," said John Kilduff of Again Capital.
Shale, meanwhile, is seen as a quick-start sector of the industry, able to ramp up in a matter of months and produce at a profit when prices are as low as $40 a barrel. While the offshore wells were coming on line, shale production has ranged between 4.7 million to 4.9 million barrels a day from October through March. "A recovery, of course; a giant surge, not so much," wrote the BofA analysts.
Total U.S. oil production peaked at 9.6 million barrels a day in 2015 and fell to 8.56 million by September, according to Energy Information Administration data. Since then, U.S. production has jumped back, reaching 9.1 million barrels a day this month, according to the latest EIA weekly data.
Bank of America points out that offshore rigs — Royal Dutch Shell's Stones field and Noble Energy's Gunflint — began production in the second half of last year. Stones, 200 miles southwest of New Orleans, is the world's deepest oil and gas field, drilling from reservoirs about 30,000 feet below sea level.
BP also started the Thunder Horse expansion project in January, adding 50,000 barrels a day of capacity to the existing field. Bank of America said offshore production should remain above 1.7 million barrels a day through 2017, in line with record levels in the third quarter of 2009. The firm said more projects are set to start in the next couple of years but at a slower pace than in the last six months.
BofA analysts said shale production stopped declining in the fourth quarter, but the fact that shale has not broken out of its current range suggests it has not yet recovered. It said the EIA forecasts a 110,000 barrel-a-day increase in April, but that is mostly seen coming from the Permian Basin, while output from the three other main shale regions is expected to decrease or remain steady.