Oil prices edging up and OPEC won’t cap production, so how soon will shale drilling increase?
Oil prices are moving up and OPEC isn’t planning to do anything to hold down production. Completions appear to be slowly increasing. What price will it take for drilling to increase? Price drop has forced improvements in shale oil and the technical knowledge will not go away when drilling increases.
5/31 – Energy Media Group at Bakken.com – Oil prices set for fourth-straight monthly gain – Oil prices have been moving up slowly for several months. Currently oil is in the range of $50.
6/2 – AP at Bakken.com – OPEC states fail to reach deal on production – At the scheduled meeting on 6/2, OPEC members did not reach an agreement to cap production.
Copying a line out of an old Monty Python skit, the secretary-general insisted that OPEC isn’t dead yet.
6/1 – Daily Caller – US Fracking Poised for Comeback, OPEC Continues to Flounder – Speculation of different people is fracking to take off again when oil is above $50, others think it will take around $60 for sustained increase in drilling.
Calculations from IMF estimate that middle east oil producers have seen their oil revenue drop by $400 billion since prices collapsed. I think we can call that a half trillion dollar mistake.
5/4 – Reuters at Dickinson Press – DUCs in a row: Oilfield servicers to gain as more wells completed – Halliburton and Baker Hughes expect a number of Drilled but UnCompleted wells (DUC) to be fracked now that prices have recovered somewhat. They expect the gross number of DUCs to decline.
4/4 – The Million Dollar Way – Mike Filloon’s Update on the Bakken – Several comments pointing to the increased production at reducing costs for Bakken wells. A few comments of particular interest to me:
Expectations for primary recovery in Bakken wells has gone from 1% or 3% of original oil in place (OOIP) in 2007, to 5% or 8%. Current stories floating around are that primary recovery is now running about 5%.
Fracking techniques have improved so much that it might make sense to refrack every well that has already been drilled.
The severe decline rate seen in Bakken wells is fading away. The new wells don’t show that rapid dropoff.