Total to cut shale investments | Shale Energy Insider

French oil and gas giant Total is the latest firm to announce cutbacks to investments in its shale programmes, the company also revealed plans for a recruitment freeze and capital reductions to the North Sea.Total has two joint ventures with U.S. group Chesapeake Energy, one to drill for shale gas in the Utica basin in Ohio along with another partner, EnerVest, and another one in the Barnett Shale basin in Texas.Speaking at the World Economic Forum in Switzerland, chief executive Patrick Pouyanne said that Total plans to reduce its capital expenditure for 2015 by 10% from the $26 billion figure allocated for 2014, in addition, the company is planning a freeze on recruitment for the year.The company’s shale projects are being targeted as a key area of scaling back investment as well as ageing North Sea oil operations.“We have fields on the U.S. East Coast and my instructions have been pretty clear – we will limit investments,” Pouyanne told the panel regarding the company’s shale interests.He added, “I can come back in one year when prices come back“, reflecting that industry experts regard shale projects as being easier and cheaper to close and restart compared to conventional operations.Pouyanna said that most shale operations were profitable at $70 per barrel and with improved efficiencies of drilling and lower cost prices could result in more shale projects becoming profitable at $50 per barrel.In their latest forecasting, Goldman Sachs predicted the margin of profitability of a majority of shale operations is between $45 and $40 per barrel.Pouyanne indicated that the widespread industry investment cuts may not necessarily be long term, stating that “There is a natural decline of five percent a year from existing fields around the world.“That means by 2030 more than half of the existing global oil production will disappear. There is an enormous amount of money that needs to be invested to get another 50 million barrels per day of new production.“The cycle will come back and higher prices will come back.”

via Total to cut shale investments | Shale Energy Insider.