By next year, production in the Eagle Ford shale could be $10 to $15 cheaper per barrel, according to new estimates from Wood Mackenzie analysts.
Fuel fix reported on the analysts’ findings, which were stated to a meeting with journalists last week. Thanks to more efficient drilling of horizontal wells, speeding up pressure pumping systems and embracing better technology, initial rates of production for wells could increase by roughly a third. In addition, service companies are slashing costs of drilling tools, fracturing proppants and rigs by an average 16 percent this year.
This is what Wood Mackenzie analysts believe could reduce a breakeven barrel value from $56 to as low as $41 by summer 2016. Similar trends could be imagined for America’s other large shale operations, such as the Bakken in North Dakota and the Permian Basin of West Texas.
Wood Mackenzie analyst Ben Shattuck stated that although oil companies have cut their U.S. shale spending from $96 billion in 2014 to $60 billion this year, a dollar will do much more this time around if service companies keep costs low.
“The death of the unconventional business has been greatly exaggerated,” Wood Mackenzie analyst Cody Rice said. “Operators can still make money in the best portions of the best plays in the lower 48.”
The research firm estimates that national oil production will increase by 675,000 barrels a day this year. Thanks to the current oil slump, this is roughly half of the growth observed in 2014. Nonetheless, the U.S. is still producing like never before, and the Eagle Ford could use a break no matter the size of it. According to Wood Makenzie, there are 20,000 prime spots in the Eagle Ford that have yet to be drilled.