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What Does OPEC Do Next?
zerohedge.com / by Salmon Ghouri via OilPrice.com / Mar 12, 2017 5:30 PM
Time is of the essence. If you fail to comprehend future market conditions and fail to steer the ship in the right direction, it can lead to disaster. This is what we have learned during the past few years. OPEC’s failure to understand the future market conditions and speed of technological advancements has resulted in economic setbacks.
A 2012 paper about the role of U.S. shale oil in global oil markets suggested that “It could be in the interest of OPEC to already increase its production now and allow oil prices to decline to below $60 to discourage further development of shale oil”. The industry, and more particularly OPEC, continued with their “business as usual” strategy, unaware of the dramatic impact U.S. shale would have on oil prices.
$100+ oil prices allowed companies to master the fracturing technology. As a result, the shale industry was able to increase average productivity per well by employing advanced horizontal drilling techniques, multi-stage fracturing and concentrating towards the most productive areas of the basin. For example, oil productivity per rig for the Bakken increased from 112 b/d in January 2007 to 746 b/d in March 2016 – over 6.6 fold increase. Improvements were also made in terms of Estimated Ultimate Recovery (EURs) which in some of the basins reached 50 to 60 percent in 2015/16.
The post What Does OPEC Do Next? appeared first on Silver For The People.
Source: http://silveristhenew.com/2017/03/12/what-does-opec-do-next/
