Low oil prices wreaked havoc with US shale producers, but increasingly the industry appears to be adapting successfully to new market conditions, writes Ante Batovic for Global Risks Insights’ website. In his opinion, “the rise in oil prices over the past six months has come as a blessing for the battered US shale producers”.
“Oil prices have risen more than 50% since January, giving a glimmer of hope to the US oil industry that the worst of the oil crisis might finally be behind them. Moreover, it forced the shale producers to adapt by reducing production costs and increasing efficiency”, Global Risks Insights says.
Global Risk Insights presents itself as a world-leading publication for political risk news and analysis, covering “critical stories overlooked by major media outlets”.
After months of consecutive falls, the number of rigs has been increasing since May and companies expect additional growth if oil prices remain at $50 levels. Oil prices fell on Monday as traders shrugged off the impact of the attempted coup in Turkey and the market turned its attention to bearish fundamentals, while disruptions to crude exports in Libya lent prices some support. Brent crude futures fell 36 cents to $47.25 a barrel, while U.S. crude futures were 31 cents lower at $45.64 a barrel, according to Reuters.
In addition, Norwegian energy consultancy Rystad Energy’s newest estimates reveal that the US holds more recoverable oil reserves than Russia or Saudi Arabia. More than 50% of reserves belong to unconventional shale oil.
For a few years, the shale reserves were considered by some analysts as a chance for new significant discoveries in the Central and Eastern Europe, Poland, Romania, and Lithuania especially. More than a year ago, American energy company Chevron announced its decision to renounce shale gas exploration in Romania, after earlier having departed from Poland and Lithuania.
At present, there are no more shale gas explorations in Romania, Sorin Gal, General Director of the National Agency for Mineral Resources, said at the 2016 Energy Strategy Summit, organized by energynomics.ro.
“I would like to make one very important clarification: the only company that owned exploration agreements on the shale gas for four blocks had withdrawn from Romania. Three of these blocks are in dispute, and the fourth was delivered to the [National] Agency [for Mineral Resources] and will probably be included in a new round for the concession of new petroleum block exploration in the future if we would consider it appropriate”, Sorin Gal clarified.
“Exploration activity is the most important at the moment, because it is the only solution Romania has to become the a large producer and exporter of natural gas”, Sorin Gal highlighted in the speech delivered at the 2016 Energy Strategy Summit.
The United Kingdom is now the flag bearer of European shale gas, and more so after the Brexit referendum led to a new prime minister in 10 Downing Street. On July 13, Theresa May stressed the importance of secure energy supplies, which shale advocates say is one of their industry’s strengths. “I want to see an energy policy that emphasizes the reliability of supply and lower costs for users,” May said.
