Oil at $80 a Barrel Muffles Forecasts for U.S. Shale Boom

[Purveyor]

By Isaac Arnsdorf and Bradley Olson Oct 21, 2014 7:03 AM ET

The bear market in oil has analysts reassessing the U.S. shale boom after five years of historic growth.

The U.S. benchmark price dropped to $79.78 a barrel on Oct. 16, the lowest since June 2012. At that level, one-third of U.S. shale oil production would be uneconomic, analysts for New York-based Sanford C. Bernstein & Co. led by Bob Brackett said in a report yesterday. Drillers would add fewer barrels to domestic output than the previous year for the first time since 2010, according to Macquarie Group Ltd., ITG Investment Research and PKVerleger LLC.

Horizontal drilling through shale accounts for as much as 55 percent of U.S. production and just about all the growth, according to Bloomberg Intelligence. The Paris-based International Energy Agency predicted in November that the U.S. would pass Russia and Saudi Arabia to become the biggest producer in the world by 2015. Though some forecasts show oil rebounding or stabilizing, any slower increase in U.S. output would shake perceptions for the global market, said Vikas Dwivedi, an oil and gas economist in Houston for Sydney-based Macquarie.

“It would reshape the way everybody would think about oil,” Dwivedi said.

Daily domestic production added a record 944,000 barrels last year and reached a 29-year high of 8.95 million barrels this month, according to the Energy Information Administration, the U.S. Department of Energy’s statistical arm.

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http://www.bloomberg.com/news/2014-10-21/oil-at-80-a-barrel-muffles-forecasts-for-u-s-shale-boom.html

[louis-t]

1. For every action there is an equal and opposite reaction.

Our 'allies' in Saudi Arabia are trying to put our shale oil guys out of business. When it gets to $60, buy everything you can having to do with oil. Once they put American shale out of business, the sky is the limit.

[Gothmog]

2. Drilling is not economical in the Balken at prices below $80 but is economic in Eagle Ford at $55

The drilling cost in the Balken plays are more expensive and become uneconomical at prices below $80 a barrel but the eagle ford plays are still economical at $55 a barrel