US shale companies resumed oil production from frozen wells

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American shale companies, including Oasis Petroleum and Pioneer Natural Resources, resumed production of oil from previously frozen wells. According to Reuters, it threatens the overstocked market with new supplies, and calls the price increase into question.

As reported, the companies resumed working at the wells that have been drilled, but production with the use of an expensive method of fracturing was not started there.

It is noted that representatives of both companies confirmed their intention to reopen all the backup wells, and with the prices higher than the current ones they are willing to continue drilling.

In particular, it was reported that Pioneer Natural Resources plans to restore 85% of oil production at a minimum return on investment, and Oasis Petroleum – 70% of production at a price of $50 per barrel in 2016, and $47 per barrel in 2017.

It is noted that in recent 6 months the number of suspended wells in major shale regions of Texas dropped by 1/3. According to the analyst of Wood Mackenzie Alex Beeker, the total number of wells in these regions is about 600, with a norm of 850.

According to the president of the Texas Association of Independent producers and royalty owners Ed Longaneker, 660 wells will produce additionally from 100,000 to 300,000 barrels per day.

However, it is reported that de-preservation of frozen wells in North Dakota may be unjustified, because in this state, in particular, Whiting Petroleum already sells oil at very large discounts.

In addition, it is reported that the company Continental Resources may re-activate wells only if oil prices increase.

Earlier it was reported that today’s (March 21 – RRT) oil price goes down because of strengthening of the US dollar, and publication of data on the increase in the number of drilling rigs operating in the USA.

Source: RBC.ua