{"id":23300,"date":"2017-03-21T15:18:40","date_gmt":"2017-03-21T20:18:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23300"},"modified":"2017-03-21T15:18:40","modified_gmt":"2017-03-21T20:18:40","slug":"how-opec-lost-the-war-against-shale-in-one-chart","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23300","title":{"rendered":"How OPEC Lost The War Against Shale, In One Chart"},"content":{"rendered":"<h3 class=\"title\"><a href=\"http:\/\/www.zerohedge.com\/news\/2017-03-21\/how-opec-lost-war-against-shale-one-chart\">How OPEC Lost The War Against Shale, In One Chart<\/a><\/h3>\n<section class=\"messages-holder\"><\/section>\n<div class=\"tabs\"><\/div>\n<section class=\"node node-type-story node-full node-nid-591221 ads-injected\">\n<div class=\"sub-title-box\">At the start of March\u00a0<a href=\"http:\/\/www.zerohedge.com\/news\/2017-03-04\/us-motorist-unwell-miles-driven-suffer-biggest-slowdown-over-2-years\">we showed a fascinating chart\u00a0<\/a>from Rystad Energy, demonstrating how dramatic the impact of technological efficiency on collapsing US shale production costs has been: in just the past 3 years, the wellhead breakeven price for key shale plays has collapsed from an average of $80 to the mid-$30s&#8230;<\/div>\n<div class=\"content\">\n<p><a href=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user5\/imageroot\/2017\/03\/03\/breakven%20wellhead.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user5\/imageroot\/2017\/03\/03\/breakven%20wellhead_0.jpg\" width=\"499\" height=\"292\" \/><\/a><\/p>\n<p>&#8230; resulting in drastically lower all-in breakevens for most US shale regions.<\/p>\n<p><a href=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user5\/imageroot\/2017\/03\/03\/shale%20breakeven%20costs.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user5\/imageroot\/2017\/03\/03\/shale%20breakeven%20costs_0.jpg\" width=\"502\" height=\"377\" \/><\/a><\/p>\n<p>Today, in a note released by Goldman titled &#8220;OPEC: To cut or not to cut, that is the question&#8221;, the firm presents a chart which shows just as graphically how exactly OPEC lost the war against US shale: in one word: the cost curve has massively flattened and extended as a result of &#8220;shale productivity&#8221; driving oil breakeven in the US from $80 to $50-$55, in the process sweeping Saudi Arabia away from the post of global oil price setter to merely inventory manager.\u00a0<iframe id=\"google_ads_iframe_\/5206\/invc.zerohedge\/economics_news_2\" title=\"3rd party ad content\" name=\"google_ads_iframe_\/5206\/invc.zerohedge\/economics_news_2\" width=\"3\" height=\"7\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<div class=\"injected-ad-wrapper\"><a href=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user5\/imageroot\/2017\/03\/20\/oil%20cost%20curve.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user5\/imageroot\/2017\/03\/20\/oil%20cost%20curve_0.jpg\" width=\"500\" height=\"355\" \/><\/a><\/div>\n<p>This is how Goldman explains it:<\/p>\n<blockquote>\n<div class=\"quote_start\"><strong>Shale\u2019s short time to market and ongoing productivity improvements have provided an efficient answer to the industry\u2019s decade-long search for incremental hydrocarbon resources in technically challenging, high cost areas and has kicked off a competition amongst oil producing countries to offer attractive enough contracts and tax terms to attract incremental capital.\u00a0<\/strong>This is instigating a structural deflationary change in the oil cost curve, as shown in Exhibit 2. This shift has driven low cost OPEC producers to respond by focusing on market share, ramping up production where possible, using their own domestic resources or incentivizing higher activity from the international oil companies through more attractive contract structures and tax regimes. In the rest of the world, projects and countries have to compete for capital, trying to drive costs down to become competitive through deflation, FX and potentially lower tax rates.<\/div>\n<\/blockquote>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>How OPEC Lost The War Against Shale, In One Chart At the start of March\u00a0we showed a fascinating chart\u00a0from Rystad Energy, demonstrating how dramatic the impact of technological efficiency on collapsing US shale production costs has been: in just the past 3 years, the wellhead breakeven price for key shale plays has collapsed from an [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[595,600,15021,723,846],"class_list":["post-23300","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-oil-production","tag-opec","tag-rystad-energy","tag-shale-oil","tag-us-shale-oil"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23300"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23300\/revisions"}],"predecessor-version":[{"id":23301,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23300\/revisions\/23301"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}