The decision of the States of OPEC to cut oil production in the first half of 2017 stimulates a new round of shale revolution in the United States. To such conclusion the American experts interviewed by RIA Novosti after a meeting of the cartel in Vienna.
According to the Vice-President of the research center for energy and environment at the University of North Dakota John Harju, the deal “will give a significant price boost to production growth outside the influence of OPEC.” Of course, this applies primarily to American shale production. Scientist makes only one reservation: “the Agreement will be effective if will be respected by all its participants”.
Executive Director of the initiative of the energy group at rice University (Houston, Texas) and former adviser to US Secretary of energy Charles McConnell predicts that in stable market conditions, oil prices will now fluctuate in the corridor of 50-60 dollars per barrel. This will certainly give American producers, though still in decline, the incentive to resume production and drilling new wells. But McConnell believes that U.S. shale fields are stably operate only when the cost of oil below $ 50 per barrel.
But the Executive Director of the American Association traders NACSSA and Vice-President of the company Fearn Oil Inc Michael Moore is confident that the technological breakthrough in shale production has been done. Drilling become more advanced and competitive, therefore, are less dependent on oil prices. Thus, the American oil & gas can get a new acceleration and will not return to the current crisis.
“The actions of OPEC to limit production capacity is welcome news for American producers of shale oil. They now have more opportunities to take more market share,” said Moore.
On the South of US 55 dollars per barrel…
The views in the US regarding an acceptable level of oil prices to resume a breakthrough shale extraction is divided. And it so happened that in the southern oil producing States where more classical oil fields, hoping for a higher oil price than in the North, where mainly develop the shale.
Commission southern States energy (SSEB) expects that the deal will spur OPEC growth in oil production in the country as early as may. And then only provided that the world price for oil will exceed the threshold of $ 50 per barrel. If “black gold” will be more expensive than $ 55, the process is greatly accelerated, the Executive Director and Secretary of the SSEB Ken Nemeth.
“With prices rising above $ 50 per barrel, it is expected that oil production in the US (and other producers outside OPEC) will increase. And most likely in may, especially if the price reaches $ 55 per barrel. This would lead to the rise of production of oil shale, a market which is stagnant, it would make it viable. But analysts expect that the manufacturers will insure and make sure that this is not a short-term increase,” — said németh.
And the main guarantor of the implementation of the agreement on the global reduction of production, and hence the rise in prices, he believes Russia. The head of the Commission recalls that, according to the forecast of the International energy Agency, Russia could increase its oil production to 230 thousand barrels per day this year and another 200 thousand b/d in the following. But the deal with OPEC wants Russia to cut production by 300 thousand b/d. According to the Director of SSEB, if Moscow will not abide by this agreement, that allow for some analysts, the agreement of the oil cartel will not be viable.
…North US is enough for 45
But in North Dakota, which has one of the largest U.S. shale formations — the Bakken, prefer to act without regard for Russia and OPEC. It argued that the cost of shale oil production on a number of crafts of this basin decreased almost to the level of Iran and Iraq, reports Reuters. So, to increase production is possible and at present, slightly fragile, prices, and even at lower.
The reporters noted that since 2014, the cost of extracting oil shale deposits of the US has declined by about half. Thus, in Dunn County, North Dakota area of about 2 thousand square miles (5180 square kilometers) of the cost of a barrel of oil is $ 15, said the head of the state Department of mineral resources Lynn Helms. For reference: cost of barrel of oil extracted in Iran is estimated at 15.5 per dollar in Iraq — 11.4 of the dollar.
“Success in the County of Dunn is fantastic,” exults the President of the petroleum Council of North Dakota Ron ness.
In his opinion, 45 dollars per barrel is enough to some producers of Bakken formation went into a plus. And even the price at 55 dollars stimulates a sharp increase in production. By the way, in the County of Dunn produce 200 thousand barrels of oil per day — more than one fifth of total production in the formation.
The Norwegian consulting company Rystad Energy estimated that the average cost of production in the Bakken formation over the past two years decreased from 59 to 29.44 USD per barrel. However, the authors emphasize that the producers of the region still need a higher price of oil due to the high cost of its transportation.
In General, the oil shale market in the US observed first after the collapse of cost of oil recovery. Again, there was news about a large number of transactions in the industry. So a price war aimed at the destruction of the shale industry in America, only made her stronger, make Reuters journalists.
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