While some major shale plays throughout the United States have experienced a setback in drilling due to falling oil prices, Colorado has remained immune to it.
According to Mark Jaffe of the Denver Post, production from the Niobrara Shale is projected to rise in November for both oil and gas. Meanwhile, the most recent quote has the price of a barrel traded on the New York Mercantile Exchange market at $82.75, down 21 percent since July.
According to Pete Stark, senior research director at Denver-based consulting firm IHS:
“The price is still well above the break-even point.”
According to the IHS survey, shale plays nationwide have an estimated break-even price for shale oil around $65 a barrel. Stark says for newer and less-developed shale plays, the price could be more than $100 a barrel, and in some high-production areas it could be as low as $40. Encana Corp., one of the largest operators in Colorado, has a “supply range cost” of $35 to $45 a barrel. Supply cost refers to the price needed to make a nine percent return.
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