Industrial Insight

Shale production | August 27, 2014

http://www.ft.com/intl/cms/s/0/e178031e-2cf4-11e4-8105-00144feabdc0.html?ftcamp=published_links/rss/comment_analysis/feed//product&siteedition=uk#axzz3BbfUQ3WF

August 26, 2014 6:49 pm

US shale: What lies beneath

By Ed Crooks

Horizontal drilling, which opens up layers of resource-bearing shale, and hydraulic fracturing, or “fracking”, has raised US crude output by more than 65 per cent in the past six years, helped by historically high oil prices that have made the techniques commercially viable.

The big question now is how much longer the US shale industry’s growth spurt will last.

The US shale industry is still young. Successful horizontal shale wells were first drilled for gas in 2002, and for oil in 2008. So there is still great uncertainty over how the reserves will perform in the long term.

Flows from shale wells decline quickly so the industry needs to drill thousands more every year for total output to grow. If drilling becomes uneconomic, the effects show through quickly in overall production.
My guess is we’re going to be in a period of significantly lower prices. Maybe not as low as $50 per barrel. But certainly enough to slow down the whole push towards shale development

Per Magnus Nysveen of Rystad, a consultancy, says about 10 per cent of the rigs working in the Eagle Ford shale formation in Texas and the Bakken in North Dakota will not be economic with global oil prices below $100 a barrel; not much lower than today’s $102.

A 10 per cent drop in drilling will not stop production rising in those areas, he says, but it will cause a significant slowdown in growth.


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I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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