Three Reasons Why the U.S. Shale Industry is Thriving While Oil Prices Are Low
It’s been one of the biggest headlines throughout recent months — the global oil environment continues to be plagued with low prices per barrel.
Yet for the U.S. shale industry — which sources oil and natural gas from the rich shale fields of Texas and North Dakota — these low prices are actually proving to be beneficial. Subsequently, U.S. shale is proving to be one of the biggest success stories of the country’s oil and gas industry, which makes up 8% of the nation’s economy.
Why do U.S. shale producers continue to thrive even as global oil prices have stayed relatively low? Here’s a look at the three reasons why reduced oil prices have created the perfect environment for the American shale boom:
Even as oil prices stay low, new discoveries of oil reserves continue to bolster shale producers throughout the U.S. Over the last 10 years, proved oil reserves have grown by an incredible 27% — more than 350 billion barrels waiting to be produced. That means there are enough oil reserves on hand to sustain another 53.3 years of production worldwide. For shale producers, this provides an impetus to continue to develop the highest-quality acreage, producing more oil per rig and ultimately staying safe from price fluctuations.
Sustainable production levels
As the oil drilling equipment market has cooled over the last year, development and production costs for shale producers have fallen as well, falling to a more sustainable and attractive level. This allows U.S. shale producers to enjoy a cost position that’s much more advantageous than that of their global competition.
Shale producers are boosting efficiency
As technologies continue to improve — particularly in the oil drilling equipment manufacturing sector — shale producers are driving up their operational efficiency in a big way. This means that oil wells are at their most productive for the lowest operational cost. As oil costs less to source and produce, lower prices have a minimal impact on the producers themselves. This makes it easy for producers to reach break-even points and continue to thrive.