U.S. shale is the lowest cost option for new oil production and is likely to be more competitive than conventional offshore drilling, according to a new report from Wood Mackenzie.
The U.S. shale industry has weathered the oil price downturn, tweaking drilling practices and cutting costs in order to stay in business.
A new report from Wood Mackenzie finds that the industry is proving to be resilient and flexible in the face of the worst oil market crisis in three decades.
The report concludes that U.S. shale companies have managed to cut costs by as much as 40 percent since 2014.
Much of that comes from lower costs from equipment suppliers and oilfield services firms.
But it also comes from improved productivity from the average shale well. Instead of drilling anywhere and everywhere, U.S. shale companies are getting better at finding the “sweet spots.”
Intriguingly, the report finds that conventional oil drillers have not had as much success in reducing costs.
Non-shale drilling projects only achieved cost reductions on the order of 10 to 12 percent, Wood Mackenzie found. That means that a lot of large oil projects are not economical with oil prices at $60 per barrel.
