Crude at $50 threatens $1.5 trillion in oil and gas projects
HOUSTON — Despite efforts to cut costs, the petroleum industry can’t make money on $1.5 trillion in pending investments on conventional and North American shale drilling projects with $50 oil, Wood Mackenzie estimates.
In a new report released late Sunday, the energy research firm said even though oil producers are aiming to squeeze out 20 to 30 percent of their project costs through discounts on equipment and oil field services, costs will likely come down by about 10 to 15 percent, on average.
Oil companies have invested $220 billion less than Wood Mackenzie had initially estimated for this year and next year, with 46 projects deferred after the oil-market crash since the summer of 2014.
The estimated $1.5 trillion in oil projects represent prospects that drillers haven’t yet sanctioned for investments. With oil at $50 a barrel, “this spend is very much at risk,” said James Webb, Wood Mackenzie upstream research manager, in a written statement.
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