Can shale oil plays cope with $80 crude?

Jonathan Ratner  
Financial Post
July 11,2012

The sharp decline in crude prices and the high cost of horizontal drilling are raising concerns about the viability of shale oil plays.

With WTI prices falling below US$80 per barrel for several days at the end of June, reports suggest that at least one operator released two pressure-pumping crews on lower realized prices, and more cuts may follow.

Amrita Sen, commodities strategist at Barclays, also noted that the number of active rigs in the Bakken formation of North Dakota currently stands ten below the peak seen at the end of March. Wells there cost an estimated US$8-million to US$9-million to drill and complete.

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