US Drillers Scrambling To Thwart OPEC Threat

US Drillers Scrambling To Thwart OPEC Threat
Companies are leaning on new techniques and technology to get more oil out of every well they drill, and furiously cutting costs in an effort to keep US oil competitive with much lower-costing oil.

NEW YORK (AP) — OPEC and lower global oil prices delivered a one-two punch to the drillers in North Dakota and Texas who brought the U.S. one of the biggest booms in the history of the global oil industry.

Now they are fighting back.

Companies are leaning on new techniques and technology to get more oil out of every well they drill, and furiously cutting costs in an effort to keep U.S. oil competitive with much lower-cost oil flowing out of the Middle East, Russia and elsewhere.

"Everybody gets a little more imaginative, because they need to," says Hans-Christian Freitag, vice president of technology for the drilling services company Baker Hughes.

Spurred by rising global oil prices U.S. drillers learned to tap crude trapped in shale starting in the middle of last decade and brought about a surprising boom that made the U.S. the biggest oil and gas producer in the world. The increase alone in daily U.S. production since 2008 — nearly 4.5 million barrels per day — is more than any OPEC country produces other than Saudi Arabia.

But as oil flowed out and revenue poured in, costs weren't the main concern. Drilling in shale, also known as "tight rock," is expensive because the rock must be fractured with high-pressure water and chemicals to get oil to flow. It became more expensive as the drilling frenzy pushed up costs for labor, material, equipment and services. In a dash to get to oil quickly, drillers didn't always take the time to use the best technology to analyze each well.

When oil collapsed from $100 to below $50, once-profitable projects turned into money losers. OPEC added to the pressure by keeping production high, saying it didn't want to lose customers to U.S. shale drillers. OPEC nations can still make good profits at low oil prices because their crude costs $10 or less per barrel to produce.


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Keith Patton | Mar. 23, 2015
Makes you wonder if the current administration didnt make a clandestine deal with the Saudis like Reagan and then CIA director William Casey did in 1986 to drop the price of oil to destabilize the Soviet Union and help cause its ultimate collapse. In todays case I was probably to appease his green voting block, try and undercut the need for the Keystone Pipeline and keep money flowing into the pockets of Warren Buffet who owns the rail lines currently shipping the oil, and spilling a lot of it in the process. I am pretty much cynical about the reasons and I am pretty sure it was not to curtail Russian adventurism, although the dropping prices hurt both the Russians and the Iranians since they rely so much on oil exports for cash. I dont think the Obama Administration has the competency or the balls to pull something like this off to effect change in international politics. It was purely for domestic consumption and is why most of the world sees Barry and his clown act as a bunch of amateurs acting out in class.


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