Majors Move to Shale | Russell T. Rudy Energy LLC
Shale has long been the realm of the independent oil companies. With the exception of ExxonMobil’s 2010 purchase of XTO Energy, the major oil companies stuck to megaprojects with massive capital budgets in remote or deep water locations, with long lead times, but decades of cash flow. Conversely, wildcatters like Harold Hamm and Aubrey McClendon led the shale revolution; borrowing money, taking risks, innovating and adapting to unanticipated challenges.
Now “Rigzone” reports that the mega-majors, Shell, ExxonMobil, and Chevron are jumping into shale. The giants hope to combine innovations pioneered by the independents with their extensive technical and financial capabilities to transform domestic exploration and production.
The independents perfected new processes such as pad drilling and massive volumes of sand used to frack new wells. Innovation and flexibility were imperatives for survival after the oil price collapse of 2014, and the surviving independents rose to the challenge. As a result of their efforts, shale wells can be drilled for as little as $5 million dollars, as opposed to offshore wells which can cost up to $100 million each.
Now the giants plan to spend a combined $10 billion on shale this year alone. Shell has budgeted $2.5 billion. One example of their financial and technical commitment to tight (shale) oil is their Bongo 76-43 well in West Texas which will drill to a total depth of 10,000 feet and extend horizontally for a mile.
ExxonMobil plans to spend one-third of its 2017 drilling budget on shale in hopes of producing nearly 800,000 barrels of oil per day (bopd) of shale oil by 2025, up from a current level of less than 200,000 bopd. The oil giant recently bought $6.6 billion worth of assets in the Permian Basin of West Texas and Southeast New Mexico from the Bass family as part of its shale strategy.
Meanwhile, Chevron plans to increase its shale output by 30% a year over the next decade to over 700,000 bopd at that time. The company currently produces about 100,000 bopd of shale oil.
If all these plans are implemented, by the end of next year, the U. S. could produce 10 million bopd for the first time since 1970. Increased domestic production would make us less dependent on foreign oil, and likely lead to lower prices.
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/148918/Oil_Giants_Upending_Shale_Turf_Where_Wildcat_Drillers_Once_Ruled/?all=HG2 .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
