U.S. SHALE: THE GIFT THAT KEEPS ON GIVING
The U.S. shale revolution may have plenty of room left to run.
As The Wall Street Journal’s Russell Gold reports, naysayers have long argued that the surge in U.S. oil and gas supply over the past decade, stemming from greater use of the fracking technique to extract resources, would eventually peter out. The reason: the U.S. would run out of wells to frack.
That ignored one other possibility: that frackers might find ways to get more resources from any given well.
The best new well drilled last year—in Susquehanna County, Pa.—produces more than four times as much oil each day as the best well drilled back in 2003, at the outset of the shale revolution.
According to Gold, while the number of rigs drilling for oil onshore in the U.S. has been broadly flat in recent times, production is increasing because of this sort of rising productivity.
If this trend carries on, it could alter estimates of how long the U.S. can sustain its energy production boom. A recent government report suggested U.S. oil production would level off in 2019. But under a scenario where extraction technology continues to improve, it could keep rising until 2040, the report concluded.
BP MAN BACK IN THE FRAY
Tony Hayward is getting his life back—at any rate, he’s back in the news.
The former chief executive of BP PLC, who resigned in the wake of the Macondo oil spill, has given an interview to the Financial Times in which he warns of the effect of Western sanctions on Russia. Mr. Hayward says cutting Russian oil companies’ access to capital markets could restrict their investment in domestic oil production, leading to lower supply and higher oil prices in future that would in turn hurt Western countries.
It’s a fair point. But making Russia’s oil industry suffer is rather the aim of the sanctions and any such move is unlikely to be cost-free for the West. Maybe, with all that supply still to come in the U.S., it won’t be such a problem.
The downward trend in Brent and WTI crude showed no sign of slowing Monday, as poor demand and high supply continued to weigh on prices. You can read the Journal’s latest oil-markets report here.
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