RE:US oil shale producers lowering cost very fastoilandgas111 wrote: Fracking technology is moving forward very fast. Newer techniques promise to reduce the side effects, at even lower operating costs. Furthermore, fracking is only the beginning of this revolution.
The Manhattan Institute recently published an excellent report by Mark P. Mills who outlines the way the new technologies are turning this industry on its head. Shale production or “unconventional” production is really a completely new industry. Here is a short quote:
By innovatively applying old and new technologies, shale operators propelled a stunningly fast gain in the productivity of shale rigs with costs per rig stable or declining.
Shale companies now produce more oil with two rigs than they did just a few years ago with three, sometimes even spending less overall. At $55 per barrel, at least one of the big players in the Texas Eagle Ford shale reports a 70 percent financial rate of return. If world prices rise slightly, to $65 per barrel, some of the more efficient shale oil operators today would enjoy a higher rate of return than when oil stood at $95 per barrel in 2012.
The new production technologies are reducing US production costs faster than the Saudi plan is reducing oil prices. OPEC’s pumping is mainly hurting its own members. Saudi Arabia is trapped. If prices go up, US shale producers will uncap some wells and produce more. And if it isn’t the US, it will be Australia, Canada, or even China’s growing shale industry. Argentina has potentially massive shale oil plays. Ditto Mexico. There is oil and natural gas all over Eastern Europe.
For the time being, the US is now the “swing producer” for both oil and gas. Production costs in the Bakken and Eagle Ford will be a lot lower than most OPEC members currently need to sustain their governments. Over time this is going to mean a significant readjustment in the spending of most Middle Eastern governments.
Yes the world is changing. Shale oil companies are loweing cost very fast. I heard most of them can now be Cash Flow positive at $40 oil in the Bakken, Eagle Ford.....
The saudis are loosing the battle. I should have listen to popfrack and sold my BNK long time ago.