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Reduction in Shale Drilling...

Posted by bernell on January 24, 2015

The top 3 oil shale plays in the U. S. that I am aware are Bakken, Eagle Ford, and Permian Basin.

These areas have been demonstrated to have rich supplies of oil and have developed the infrastructure to drill, fracture and produce it.

Though the TMS has a few advantages over these plays, our oil is a bit deeper and more challenging to get.  Moreover, the infrastructure is not fully in place to produce the oil.

The year of 2014 was to be the year of the TMS in that it would be proven to be commercial and would become perhaps the number 4 oil producing shale starting in 2015 or it would be determined to be non-commercial and a bust.

In my opinion, the TMS was well on its way to being proven to be a success despite some issues by some companies in some areas.  Then, that old supply/demand thingy hit and the price of oil dropped by about 60% in about 6 months. 

Now, the TMS, while mostly proven, especially at $80+ oil, has been slowed dramatically.

But, so has the drilling in the Big 3 plays.

I won't go into tremendous detail, but let me just share some info that was shared with me this morning on the Bakken, which is likely the more profitable oil shale play as things stand today.

The info shared with me was that there are currently 160 rigs in the Bakken drilling today.  The peak number of rigs was 218.  The prediction is for there to be 60-75 rigs drilling by summer. 

Furthermore, my source says there are 700 wells that have been drilled, but that have not been fracked/produced.

I suspect this scenario is being repeated, perhaps even in a heavier way, in Eagle Ford and Permian Basin plays.

The TMS briefly had 10 rigs in the area at one point, but likely no more than 9 drilling at any one time at our peak.  Today there are 3 rigs and I expect somewhere between 0 and 3 by the end of the summer if prices remain at the current levels.

Currently there are 11 wells that have been drilled and have not been fracked/produced in the TMS. I expect this number to grow to perhaps as many as 15 or 16 over the next few weeks.

Shale oil plays, in general, and the TMS, in particular, simply cannot be produced profitably at the current price of oil.

What do you think about it?