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Posted On: 05/03/2017 12:03:13 PM
Post# of 2218
The Price of a Barrel
Production capacity is one thing. You can add more rigs to an oil play any day.
But how long those rigs will last depends on just one thing: production price.
If it costs too much to get the product out of the ground, operations grind to a standstill. It’s exactly what took most U.S. shale plays down a peg when the rout started two years ago... all of them except the resilient Permian Basin, of course.
The Permian stood alone in increasing production even as rig counts dropped off a cliff, not only because it held massive reserves, but because they were easy and cheap to get.
Today, most of the country’s climbing rig count is coming from the Permian, because producers have realized that’s where the biggest developments have yet to happen.
Production capacity is one thing. You can add more rigs to an oil play any day.
But how long those rigs will last depends on just one thing: production price.
If it costs too much to get the product out of the ground, operations grind to a standstill. It’s exactly what took most U.S. shale plays down a peg when the rout started two years ago... all of them except the resilient Permian Basin, of course.
The Permian stood alone in increasing production even as rig counts dropped off a cliff, not only because it held massive reserves, but because they were easy and cheap to get.
Today, most of the country’s climbing rig count is coming from the Permian, because producers have realized that’s where the biggest developments have yet to happen.
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