Shale plays - sitting high on the cost curve

In: https://ora.ox.ac.uk/objects/uuid:0ec8ff9d-b610-4070-82c7-ca758730a003

Abstract

In recent years, a key theme in the oil market has been that of disappointing non-OPEC supply growth, despite an environment of high oil prices. Oil companies are struggling to generate substantial returns on their investments; decline rates have stepped up in various areas like the North Sea and Brazil; and existing fields are requiring a higher CAPEX spending on maintenance. This has resulted in challenging issues of feasibility and scalability and hence it has been harder for producers to generate capacity to offset declines in production. Moreover, planned capacity investments might not be achievable at the current budgeted costs. In recent years, infrastructure, material and manpower constraints have been significantly underestimated, leading to substantial cost overruns and project delays. Rising security costs have also played a part, as companies are increasingly operating in countries that are politically unstable.