• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes The Inconvenient Truth Of Electric Cars
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 50 mins Here we go folks, the wish of so many: Pres. Trump threatens to lessen US security role in Strait of Hormuz, unveils sanctions
  • 3 hours Climate change & Wildfires: More Wildfires To The Western U.S., Will Affect Tens Of Millions Of People
  • 47 mins The Plastics Problem
  • 6 hours Hard To Believe: UAE Will Work To Defuse Middle East Tension
  • 8 hours Oil Demand Needs to Halve: Equinor
  • 3 mins Wonders of Shale - Gas, bringing investments and jobs to the US
  • 4 mins Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 2 hours Looks like Trump is putting together a "Real" Coalition to protect Persian shipping lanes. Makes perfect sense. NO Fake "Coalition's of the Willing" UPDATE REUTERS Pompeo "Sentinel Program"
  • 4 hours Cherry Picking Climate Data
  • 14 hours Solar Panels at 26 cents per watt
  • 8 hours Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
  • 16 hours Hydrogen FTW... Some Day
  • 17 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
Iran: A Geopolitical Time Bomb

Iran: A Geopolitical Time Bomb

Oil markets have turned particularly…

The Irony of California’s Oil Dependence

The Irony of California’s Oil Dependence

California’s oil production has been…

Ag Metal Miner

Ag Metal Miner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,…

More Info

Low Oil Prices Causing Majors To Reconsider Larger, Riskier Projects

With oil hovering around $70 a barrel, oil and gas companies must make decisions on 800 proposed projects worth a total of $500 billion. An oil analyst told Reuters that up to $150 billion worth of those projects might not be built because of low oil prices as some projects require higher energy prices than others to be cost effective.

Oil companies are trying to access more complex and hard to reach fields located in some cases deep under the sea, but the cost of production has risen sharply, and given the rising cost of raw materials and the need for expensive new technology to reach the oil, many projects are simply no longer feasible. The price of oil has plunged by 40% in the last 5 months to around $70 a barrel.

Related: Could Falling Oil Prices Spark A Financial Crisis?

The heavy and civil engineering construction segment, which includes oil drilling and transportation projects, was one of only 2 US construction market sectors that actually lost jobs (1,300 of them) in November, but it’s not just US projects at risk of low-price cancellation. Chevron‘s Rosebank project in the North Sea has already been delayed for several years and, in response to a question about its future, Chevron said it was still too early in design to determine if it was feasible and cost-effective.

Norway’s Statoil this week said it had postponed until next October, an additional 6-month delay, a decision to invest $5.74 billion in the Snorre field in the Norwegian Sea as its profitability was under threat.

Related: Which Oil Producing Region Loses the Most From Low Prices?

The projects most at-risk, however, are the ones that involve expensive extraction of oil from Canada’s tar sands. This includes TransCanada‘s proposed Keystone XL pipeline.

Royal Dutch Shell‘s liquefied natural gas project in British Columbia, already under pressure from a looming supply surge, faces further strain in the current price environment, analysts told Reuters. The project likely requires oil at $80 a barrel to break even.

Royal Dutch Shell’s chief financial officer Henry Simon indicated in October that it was “less likely” to go ahead with unconventional projects in West Canada if oil falls below $80 a barrel.

By Jeff Yoders

Source - www.agmetalminer.com 

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News