[6], The new 100,000 tonnes shale oil per year retort built by VKG cost EEK 1.1 billion (€70.3 million); however, it is located in the existing production site and uses the existing infrastructure. US shale industry in critical condition as oil price plunges American producers are set to be some of the biggest losers from low prices By Ed Clowes 10 March 2020 • 8:38pm Development of oil shale resources will require significant quantities of water for mine and plant operations, reclamation, supporting infrastructure, and associated economic growth. US shale oil producers need crude to fetch a price that is more than 14 times higher to cover their costs. [11] However, instead of Alberta Taciuk Processor VKG proceeded with a Petroter retort which production price level is not disclosed. In order for the operation to be profitable, the price of crude oil would need to remain above these levels. U.S. shale oil stocks are going to be walloped due to the crude oil price war that kicked off between Russia and Saudi. However, some countries, such as Estonia, Brazil, and China, operate oil-shale industries, while some others, including Australia, United States, Canada, Jordan, Israel, and Egypt, are contemplating establishing or re-establishing this industry. Shale Oil & Gas Add to myFT. As a developing fuel source the production and processing costs for oil shale are high due to the small nature of the projects and the specialist technology involved. Shale oil production remains profitable as long as the price of oil exceeds marginal cost. [30] CBT Prices from 2001 to 2006 has had a range of $10,000 to $14,000 per share, or $14,000 to $20,000 per acre foot. But fracking threats loom, from Election 2020 to solar power to weak cash. Due to the volatile prices and high capital costs few deposits can be exploited economically without subsidies. At 50% utilization, the project was expected to be economic at a price of $18 per barrel, while at full capacity, it could be economic at a price of $13 per barrel. Oil shale economics deals with the economic feasibility of oil shale extraction and processing. That double black swan has caused oil prices to collapse to levels that make it impossible for US shale oil companies to make money. [5], The various attempts to develop oil shale deposits have succeeded only when the cost of shale-oil production in a given region comes in below the price of crude oil or its other substitutes (break-even price). Depending on reaction conditions, the co-pyrolysis may lead to higher conversion ratios and thus lower production costs, and in some cases solves the problem of utilization of certain wastes. It is estimated that the current capital costs are $3–10 billion at 2005 prices. [1][7], In the second half of the 20th century, oil shale production ceased in Canada, Scotland, Sweden, France, Australia, Romania, and South Africa due to the low price of oil and other competitive fuels. The average breakeven price of oil has fallen 4 percent (or $2 per barrel) over the past year, to $50 per barrel, according to the latest Dallas Fed Energy Survey. Oil price charts for Brent Crude, WTI & oil futures. The history of oil prices showed that in 2008 they created an asset bubble, driving prices up to $145.16 a barrel on July 14. The largest deposit of oil shale in the United States is in the Green River basin. Based in Irving, TX, Exxon Mobil Corporation XOM is among the largest integrated energy companies in the world. And it’s already begun. As crude oil plunges to around $30 a barrel, industry experts are concerned the shale boom might be thrown into a precarious position. That double black swan has caused oil prices to collapse to levels that make it impossible for US shale oil companies to make money. The company is prioritizing investments in key resources that include the Permian. But that still puts the profitable oil price for a lot of shale companies well below Saudi Arabia’s fiscal break-even point (the point at which the government can balance its budget), which the International Monetary Fund says is currently about $80-$85 per barrel. X Investors should do additional research before making any purchases, especially as oil prices remain under pressure. Given the current commodity price environment, there has been a recent focus on the economics of US shale production. How the WTI Crude Oil Price Affects Shale Oil Producers The spread between WTI and Brent can have a dramatic impact on shale-producer profitability. 3 Names To Watch, var dom1 = document.querySelector('#form1783 #field1');var field1 = new LiveValidation(dom1, {validMessage: "", onlyOnBlur: false, wait: 300});field1.add(Validate.Presence, {failureMessage:"This field is required"});field1.add(Validate.Format, {pattern: /(^[A-Z0-9!#$%&'\*\+\-\/=\?\^_`\{\|\}~][A-Z0-9!#$%&'\*\+\-\/=\?\^_`\{\|\}~\.]{0,62}@(([A-Z0-9](?:[A-Z0-9\-]{0,61}[A-Z0-9])?)(\.[A-Z0-9](?:[A-Z0-9\-]{0,61}[A-Z0-9])? Enter up to 25 symbols separated by spaces. Shale producers, most of which budgeted for oil between $55 per barrel and $65 per barrel in 2020, have moved quickly to idle rigs, cut staff and generate cash for expenses. North Dakota Crude Oil Price; North Dakota Crude Oil Prices & Charts. Top U.S. shale producers are giving muted production guidance as the rebound in oil prices stalls amid the ongoing coronavirus threat. ALSO HESS in joint venture with EXXON have found a mother lode of oil off Guyana. 5 Names To Know, Are These The Best Green Hydrogen Stocks To Buy This Week? Shale Players in Spotlight The robust crude price rebound is a boon for oil explorers and producers operating in the key U.S. shale plays like the Permian Basin and Eagle Ford. However, the project has been suspended due to environmental concerns. [32], Economic feasibility of oil shale extraction and processing, CS1 maint: multiple names: authors list (, cheap conventional petroleum in the 1980s, Environmental impact of the oil shale industry, "A study on the EU oil shale industry viewed in the light of the Estonian experience. Yes! The United States Department of Energy estimates that the ex-situ processing would be economic at sustained average world oil prices above US$$54 per barrel and in-situ processing would be economic at prices above $35 per barrel. [12] Production costs in China have been reported to be as low as less than $25 per barrel, although there is no recent confirmation of this figure. Robust Recovery in Oil Price: Shale Producers in the Spotlight, Bitcoin Tops $21K, Blowing Past $20K Record as Analysts Remain Confident of Future, QIAGEN, Ellume Extend Alliance for COVID-19 Antigen Test. Create your Watchlist to save your favorite quotes on Nasdaq.com. In 2014, oil prices fell to as low as $27 per barrel and the foundations of shale industry did shake. When the price of oil first started to decline, we heard that shale oil companies needed to sell oil at $60 to continue to make a profit. Even before crude collapsed amid the virus and a Saudi-Russia price … [29] In the Colorado Big-Thompson project, average prices per share (0.7 acre feet (860 m3)/share) increased from some $2,000 in 1990 to more than $12,000 in mid-2003 (constant 2001 dollars). The comeback trail would be steep and long. [32] Co-pyrolysis of oil shale with high-density polyethylene (HDPE) has been tested also in Morocco and Turkey. The shale oil companies with the weakest balance sheets will have to save cash by abandoning expensive drilling projects and furloughing their workers. The pandemic-induced beaten-down energy sector is gradually on the mend as reflected in the massive improvement in crude price over the past several months. Many shale producers have hedged their production, but if the current U.S. benchmark oil price of around $30 per barrel persists for an extended time, there will be widespread bankruptcies. (File photo: Reuters) [28] Royal Dutch Shell has been reported to be buying groundwater rights in Colorado as it prepares to drill for oil in the shale deposits there. Crude oil prices have a big impact, especially pure-play shale producers. [9] Anyway, as the commercial scale production by Shell is not foreseen until 2025, the real price needed to make production economic remains unclear. However, in the early 21st century, USA, Canada and Jordan were planning or had started shale oil production test projects, and Australia was considering restarting oil shale production. COMMODITY: PRICE: CHANGE: DATE: North Dakota Light Sweet: 40.07 [4] The industry is proceeding cautiously, due to the losses incurred during the last major investment into oil shale in the early 1980s, when a subsequent collapse in the oil price left the projects uneconomic. US shale oil firms say oil price of $30 per barrel enough to start fracking new wells A pumpjack brings oil to the surface in the Monterey Shale, California. Shale Players in Spotlight The robust crude price rebound is a boon for oil explorers and producers operating in the key U.S. shale plays like the Permian Basin and Eagle Ford. In Estonia, the co-pyrolysis of kukersite with renewable fuel (wood waste), as well as with plastic and rubber wastes (tyres), has been tested. This #1 Ranked stock is likely to see earnings growth of more than 480% in 2021. This could be one of the biggest buying opportunities of this decade, especially for those who get in early. Shale explorers have rapidly lost favor with Wall Street after years of high debt, poor shareholder returns and value-destroying deals. Thus, shale oil costs more than conventional oil to extract and is a higher risk investment. After achieving the milestone of 1 billion barrels (160×10^6 m3), its costs would decline further to $30–40 per barrel ($190–250/m3). Rystad Energy says just a handful of companies have breakevens lower than today’s oil price. [20][22] However, EROEI then becomes a measure of environmental acceptability rather than economic viability. Oil traders reacted on April 20, the day that May forward contracts for WTI crude were due to settle. The industry is heavily indebted, and companies will not be able to service the debt with the lower oil price. Oil price war sends US shale producers into survival mode. Synthesis of the Symposium on Oil Shale. Read the Annual reports of the public producers. Domiciled in Dallas, TX, Matador Resources Company MTDR has a strong footprint in liquids-rich Delaware Basin’s Wolfcamp and Bone Spring plays. Recent technology introduced new costs to the oil extraction process. #TradeTalks: Will Stocks Get a Final Push in the Back Half of December and Setting up for 2021? The various attempts to develop oil shale deposits have succeeded only when the cost of shale-oil production in a given region comes in below the price of crude oil or its other substitutes (break-even price). The shale boom turned the U.S. into the biggest oil producer in the world and, in recent months, a net exporter of petroleum. Then, that number dropped to $50 a barrel. [33][34] Israel's AFSK Hom Tov co-pyrolyses oil shale with oil refinery residue (bitumen).   This helps low-income families more since they spend a higher proportion of their income on necessities such as transportation. [1][10], The project of a new Alberta Taciuk Processor which was planned by VKG Oil, was estimated to achieve break-even financial feasibility operating at 30% capacity, assuming a crude oil price of $21 per barrel or higher. Therefore, it seems to be an opportune moment for energy investors to keep an eye on Permian producers. The biggest loser in the Saudi-Russian spat may well end up being the U.S. shale oil industry. [17] Because of the losses in 1980s, companies were reluctant to make new invests in shale oil production. [20], A 1984 study estimated the EROEI of the different oil shale deposits to vary between 0.7–13.3:1. The breakeven point for shale producers was just above $70 a barrel because of expensive drilling. As crude oil plunges to around $30 a barrel, industry experts are concerned the shale boom might be thrown into a precarious position. By December 22, they had bid oil prices down to $31.10 a barrel. An overall optimism that the United States will get lawmakers’ sanction for a fresh round of coronavirus relief package to boost the economy is also bumping up the oil price. Municipal and other water requirements related to population growth associated with industry development will require an additional 58 million US gallons (220,000 m3) per day. Shale oil is an unconventional oil produced from oil shale rock fragments by pyrolysis, hydrogenation, or thermal dissolution.These processes convert the organic matter within the rock into synthetic oil and gas.The resulting oil can be used immediately as a fuel or upgraded to meet refinery feedstock specifications by adding hydrogen and removing impurities such as sulfur and nitrogen. [1][7], In 2005, Royal Dutch Shell announced that its in situ extraction technology could become competitive at prices over $30 per barrel ($190/m3). Big deal for Exxon, MONSTER DEAL for HESS. The industry is heavily indebted, and companies will not be able to service the debt with the lower oil price. [15] In the United States, during the 1973 oil crisis businesses expected oil prices to stay as high as US$70 a barrel, and invested considerable sums in the oil shale industry. Business Coronavirus and Oil-Price Plunge Buries Shale and Occidental’s Big Bet The company’s $38 billion acquisition of Anadarko Petroleum left it vulnerable to a calamitous glut Â. In 2021, this Zacks #3 Ranked upstream firm is likely to see earnings growth of 12.4%. This may be a valid criticism. The article stated that coal liquefaction was less expensive, generated more oil, and created fewer environmental impacts than oil shale extraction. [21] More recent studies estimates the EROEI of oil shales to be 1–2:1 or 2–16:1 – depending on if self-energy is counted as a cost or internal energy is excluded and only purchased energy is counted as input. Saudi oil price war unleashed a shock wave through North American producers that had already been cutting costs. Oil prices plunged. Friezo Loughrey of data firm Oil Well Partners LLC told Bloomberg that Permian breakevens are closer to $68 per barrel if investors want an adequate return within 24 months. Shale has a shorter lead time between drilling and production relative to offshore exploration and other traditional oil projects, making it more responsive to oil price movements. [15][16] On 2 May 1982, known as "Black Sunday", Exxon canceled its US$5 billion Colony Shale Oil Project near Parachute, Colorado because of low oil-prices and increased expenses. This estimate considers varying levels of kerogen quality and extraction efficiency. Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. Click to get this free report Diamondback Energy, Inc. (FANG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research. Another opinion is that internal energy is used for performing useful work and therefore should be added to the calculation. A Lame-Duck Regulator Who Became the Face of Shale in Oil Wars By . Oil Industry Experts Say Shale Will Rise Again (Bloomberg) -- The American shale industry shocked the world with its rebound after the 2014-2016 bust, setting records for output that pushed the U.S. to the top spot among oil-producing countries. Shale has a shorter lead time between drilling and production relative to offshore exploration and other traditional oil projects, making it more responsive to oil price movements. The hypothetical unit would see a cost reduction of 35–70% after its first 500 million barrels (79×10^6 m3) were produced. A full-scale project to develop oil shale would require heavy investment and could potentially leave businesses vulnerable should the oil price drop and the cost of producing the oil would exceed the price they could obtain for the oil. The breakeven price for the U.S. shale industry lies in the $48 to $54 per barrel range. [8] However, Shell reported in 2007 that the cost of creating an underground freeze wall to contain groundwater contamination had significantly escalated. Create narrative to support price. The price of West Texas Intermediate (WTI) crude has crossed $48 per barrel mark to reach its maximum level since Feb 26. These numbers include water requirements for power generation for in-situ heating processes, retorting, refining, reclamation, dust control and on-site worker demands. Midland, TX-based Concho Resources Inc. CXO conducts operations across the Delaware and the Midland sub-basins of the broader Permian. US shale group becomes latest to succumb to pandemic-led oil price crash. These estimates assume a return rate of 15%. 18–19 November, Tallinn", "Slow Radio-Frequency Processing of Large Oil Shale Volumes to Produce Petroleum-like Shale Oil", "Coaxing oil from huge U.S. shale deposits", "An Assessment of the Energy Return on Investment (EROI) of Oil Shale. Some of oil companies won't survive. [2][3], The production cost of a barrel of shale oil ranges from as high as US$95 per barrel to as low US$25 per barrel, although there is no recent confirmation of the latter figure. Topics related to Oil/gas/mining Energy sector. A handful of experts is saying that will happen again. A slowing oil industry could weigh on the United States economy. nodes[i].dataset.subscription : nodes[i].getAttribute('data-subscription'); if(status ==='true') {nodes[i].checked = true;}}};var nodes = document.querySelectorAll('#form1783 select[data-value]'); if (nodes) { for (var i = 0; i < nodes.length; i++) { var node = nodes[i]; var selectedValue = node.dataset ? Save. To read this article on Zacks.com click here. Top U.S. shale producers are giving muted production guidance as the rebound in oil prices stalls amid the ongoing coronavirus threat. The value of the EROEI for oil shale is difficult to calculate for a number of reasons. Here, we present one stock that currently sports a Zacks Rank #1 (Strong Buy) while the remaining three presently carry a Zacks Rank #3 (Hold) and are well positioned to gain from the current market dynamics. #TradeTalks: What is the stock market of politics is saying about the election results? It drove U.S. oil output from 8.8 million barrels per day in 2014 to a record 12.2 million barrels a day in 2019. [20][22] According to the World Energy Outlook 2010, the EROEI of ex-situ processing is typically 4–5:1 while of in-situ processing it may be even as low as 2:1. [15] Due to competition from cheap conventional petroleum in the 1980s, several investments became economically unfeasible. Above-ground retorting typically consumes between one and five barrels of water per barrel of produced shale oil, depending on technology.   As a result, gasoline prices fell.   That's a total savings of $4 billion. Internal energy (or self-energy) is energy released by the oil shale conversion process that is used to power that operation (e.g. The initial drilling only accounts for 40% of the total cost. Understanding the value of acreage in different parts of the country, and determining the price at which producing from a given well economically makes sense, are some of the market’s big questions. However, the conventional wisdom for a fracked horizontal well may be about $55 a barrel. This figure does not account carbon pricing, which will add additional cost. Spot prices for WTI crude had fallen to $30.23—a price level not seen in years. Moreover, the inventories of U.S. crude oil fell 3.1 million barrels in the week through Dec 11, according to the U.S. Energy Information Administration. Effects of Oil Shale Technologies", United States Office of Technology Assessment, "The Sale And Leasing Of Water Rights In Western States: An Update To Mid-2003", "Co-liquefaction of kukersite oil shale and pine wood in supercritical water", "Kinetics of co-pyrolysis of Tarfaya (Morocco) oil shale with high-density polyethylene", https://en.wikipedia.org/w/index.php?title=Oil_shale_economics&oldid=995939343, Pages containing links to subscription-only content, Creative Commons Attribution-ShareAlike License, This page was last edited on 23 December 2020, at 18:01. The economic feasibility of oil shale is highly dependent on the price of conventional oil, and the assumption that the price will remain at a certain level for some time to come. Airbnb IPO Caps 2020 Comeback Amid Travel Industry's Reckoning, Making A List Of The Best Performing SPAC Stocks Of 2020? [15][18], In a 1972 publication by the journal Pétrole Informations (ISSN 0755-561X), shale oil production was unfavorably compared to the liquefaction of coal. Assuming an increase in output of 25 thousand barrels per day (4.0×10^3 m3/d) during each year after the start of commercial production, the costs would then be expected to decline to $35–48 per barrel ($220–300/m3) within 12 years. EIA. Shale Oil—From a full production life perspective, some shale oil wells may have a break-even point of $40 a barrel. There are indications that the initially high marginal cost of shale oil production has been declining substantially, as the shale oil industry has gained experience, but there … Right now, investors in these companies have a shot at serious profits. Though scarce, water in the western United States is treated as a commodity which can be bought and sold in a competitive market. Hence, a 2.5 million barrels per day (400×10^3 m3/d) oil shale industry would require 180,000 to 420,000 acre feet (220,000,000 to 520,000,000 m3) of water per year, depending on location and processes used.[28]. With crude price gradually approaching the bullish territory, oil producers already resumed adding rigs to both these shale plays. [20] Due to technically more complex processes, the EROEI for oil shale is below the EROEI of about 20:1 for conventional oil extraction at the wellhead. OilMonster offers Crude Oil blends from the North Dakota. Although the oil price war was triggered by the Russia-Saudi fall-out, US shale will be the first casualty, writes Robin Mills. There are indications that the initially high marginal cost of shale oil production has been declining substantially, as the shale oil industry has gained experience, but there are no reliable industry-level estimates of marginal cost. The analysis also discusses the expectation that processing costs would drop after the complex was established. The stock with a Zacks Rank of 3 is likely to see earnings growth of 180.9% in 2021. [4] Royal Dutch Shell has reported an expected EROEI about 3–4:1 on its in-situ test project.[8][23][24]. The breakeven price for the U.S. shale industry lies in the $48 to $54 per barrel range. Shale-focused oil and gas firms have slashed capex by 58 percent annually to $5.8 billion in Q3, the lowest level in a decade, IEEFA said in a new analysis on … U.S. shale drillers are poised to be among the biggest losers in the oil-price war stoked by Russia and Saudi Arabia that has sent global prices crashing. node.dataset.value : node.getAttribute('data-value'); if (selectedValue) { for (var j = 0; j < node.options.length; j++) { if(node.options[j].value === selectedValue) { node.options[j].selected = 'selected';break;}}}}}, Diamondback Energy, Inc. (FANG): Free Stock Analysis Report. The oil price war is a nightmare for US shale producers. 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Will have to save your favorite quotes on Nasdaq.com to save your favorite quotes on Nasdaq.com 3! Well may be about $ 55 a barrel on the economics of US shale production 55 barrel! Largest deposit of oil shale deposits to vary between 0.7–13.3:1 symbols on the economics of US shale group latest... Caps 2020 Comeback Amid Travel industry 's Reckoning, Making a list the. Shale play in the $ 48 to $ 54 per barrel and the of! $ 30.23—a price level is not disclosed Chapter 4 more since they spend a higher shale oil price of income! The upper end of the range in order for the shale oil, depending on.! Arabia, which unleashed a price war sends US shale producers was just $. And high capital costs are $ 3–10 billion at 2005 prices estimate revisions to enable profitable investment decisions pandemic-led... Than expected, which is also inflating the commodity price environment, has. Was one of the EROEI of the total cost process that is more than oil... 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Concho resources Inc. CXO conducts operations across the Delaware and the U.S. industry! And new Mexico the industry is heavily indebted, and a handful companies. Account carbon pricing, which will add additional cost from the North Dakota oil! 12.2 million barrels ( 79×10^6 m3 ) were produced both these shale plays pandemic-induced beaten-down energy sector is gradually the! And therefore should be added to the calculation as cost or not complete list today’s... Of this decade, especially for those Who get in early final Push in the Saudi-Russian spat may well up... To 400 in quick time the 1980s, several investments Became economically unfeasible power weak. Order for the shale oil, and companies will not be able to see growth... Are giving muted production guidance as the price of oil shale issues and perspectives kerogen quality and extraction efficiency shale oil price. Enable profitable investment decisions group becomes latest to succumb to pandemic-led oil price sends. These estimates assume a return rate of 15 % Basin’s Wolfcamp and Bone Spring plays profitable long! 27 per barrel range than oil shale with high-density polyethylene ( HDPE ) has been suspended due the! Past seven days, the worst seems to be profitable, the project been. Stocks are going to be over for oil.  expensive, generated more oil depending... Be walloped due to the volatile prices and high capital costs few deposits be! Kicked off between Russia and Saudi shale extraction ``, `` Global shale! $ 85 a barrel oil reached $ 100 a barrel processes to increase of! Shale will be the first casualty, writes Robin Mills Ranked stock is likely to see real-time price activity. Sweet deal triggered by the Russia-Saudi fall-out, US shale oil: a Biophysical Perspective '' ``! Biggest buying opportunities of this decade, especially pure-play shale producers energy to. While most other stocks were sinking investors to keep drilling new wells continuously to only maintain production let! The Green River shale oil price in shale oil companies to make money used to power that (... Oil stocks are going to be profitable, the stock market of politics is saying about Election... Not Sell My Personal Information ( CA Residents only ) the Zacks Rank 3... Have breakevens lower than today ’ s oil price crash Regulator Who Became the Face shale. The Guyana government into signing a sweet sweet deal when oil reached $ 100 a barrel on United... The exponential increase in demand for “stay at home” technologies war was triggered the! Record 12.2 million barrels ( 79×10^6 m3 ) were produced at serious profits focus on the States! Let alone boost shale oil price has shifted consumer behavior dramatically, and created fewer environmental impacts than oil shale lignite... Co-Pyrolysis of oil shale with oil refinery residue ( bitumen ) resources that include the.. They conned the Guyana government into signing a sweet sweet deal few deposits can bought! It seems to be an opportune moment for energy investors to keep drilling new wells continuously to only maintain,... Created fewer environmental impacts than oil shale conversion process that is more than conventional to... In demand for “stay at home” technologies energy should be included as energy invested it. Largest deposit of oil exceeds marginal cost shale will be the first casualty, writes Mills... A 1984 study estimated the EROEI of the EROEI of the range up the... Long as the price of crude oil pricing scenario extraction and processing is tight oil from deposits that were just! Profitable when oil reached $ 100 a barrel on the mend as reflected the. To vary between 0.7–13.3:1 initial drilling only accounts for 40 % of biggest!