It won’t be just US oil drilling that will be shrunk by lower oil prices. A lot of oil drilling around the world will shrink.
I’m reading elsewhere that the advantage of fracked horizontal wells over vertical wells is that they can be turned off and on pretty much at will without hurting future production.
That means that the price drop will mothball all the expensive wells pretty fast. But just as quickly, when prices turn around, they can be turned back on.
So the dip in oil prices could go pretty low but it will light a match under the world econonmy and push oil prices up. US oil drillers will be the first to market when prices return higher.
Im reading elsewhere that the advantage of fracked horizontal wells over vertical wells is that they can be turned off and on pretty much at will without hurting future production.
That’s good to know. That will keep the Saudi from getting too greedy. I am not sure if they can adapt to a lower standard of living where they have to answer to markets.
The one thing we have to do if keep Obama and the libs from making it too hard to get our oil in the future.
Very true. I suspect Offshore will be hurt worse than onshore tight formations.
I would want to read more about that. Right now I have significant doubts about that.
AFAIK, "fracking" is more a matter of degree than kind in the oil business these days.
The charts shown here could be very misleading or quite accurate depending on the parameters used in devising them.
” they can be turned off and on pretty much at will without hurting future production.”
But shutting in wells is not permitted under oil leases, in that the leases expire if wells are not producing (or there is continuous drilling).*
* Yes, I know there are lots of exceptions. But low price is not one of them.
They have done this with natural gas in the past. They would cap areas and not use them because the price was too low. When the price goes up (supply and demand folks) then they uncap them and are good to go
I am trying to understand “return on net cumulative capital cost”. Can either of you explain? I find it in the literature and think I understand it, but why is Europe’s so high and ours so low? Competition? Am I misunderstanding that measure?