E&P: Will Production Resilience Continue in 2016?


E&P Companies Did More With Less In 2015

The year-long depression in oil and natural gas prices helped spur continued innovation in the energy space in 2015. E&P companies drove down well costs and operational expenses to deliver wells that remained economic, with far lower pricing, than imagined possible heading into last year. Industrywide, horizontal well costs declined by as much as 35 percent by late 2015 (vs. mid-2014) while lease operating costs were down more than 10 percent for many U.S. E&P operators.
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The Second Coming of the U.S. as an Oil Powerhouse


The U.S. has been producing over 9 million barrels of oil per day through the first half of 2015. Production at those levels has not been seen since the early 1970s – the last time the U.S. was considered an oil powerhouse. Much has changed since that time. The potent combination of hydraulic fracturing and horizontal drilling has opened vast reserves of oil and natural gas that were once believed to be economically unviable. Our main source of imported oil is Canada and not the Middle East. The 77-year monopoly of Mexican state-owned petroleum company Pemex ended this year when it began partnering with foreign companies (including Italy’s Eni) to develop Mexico’s oil reserves.
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Proved Oil Reserves the Real Story


In December 2014 the Energy Information Administration (EIA) released its latest estimate of U.S. Crude Oil and Natural Gas Proved Reserves. Although natural gas reserves rose, the real story was crude oil reserves. The EIA reported that U.S. proved reserves of crude oil and lease condensate had increased for the fifth year in a row, and had exceeded 36 billion barrels for the first time since 1975:
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Beyond Commodity Prices – The Story on Midstream Oil & Gas Opportunities in 2015


The latest news covering the oil and gas market for 2015 focuses almost entirely on the detrimental effects of low prices on exploration and production, making it easy to miss the bigger picture. Just as the fluctuations of the stock market do not reflect the entire state of the US economy, commodity oil and natural gas prices do not tell the whole story of our industry. Even in the face of a 50% drop in the price of a barrel of oil, and a reduction in natural gas prices, opportunities still abound for investment, especially in the midstream segment.
 
Since 2007, previously non-productive shale reserves have come online to unlock a wealth of new oil and gas supplies. However, the resulting surge of shale-related production revealed deficiencies in both the quantity and condition of our existing infrastructure used to bring these products to market.
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