• 4 minutes England Running Out of Water?
  • 7 minutes Trump to Make Allies Pay More to Host US Bases
  • 10 minutes U.S. Shale Output may Start Dropping Next Year
  • 14 minutes Washington Eyes Crackdown On OPEC
  • 24 mins Tidal Power Closer to Commercialisation
  • 9 hours Why U.S. Growers Are Betting The Farm On Soybeans Amid China Trade War
  • 14 hours US-backed coup in Venezuela not so smooth
  • 23 hours BATTLE ROYAL: Law of "Supply and Demand". vs. OPEC/Saudi Oil Cartel
  • 52 mins Read: OPEC THREATENED TO KILL US SHALE
  • 6 hours Fisker Announces 'Mass Market' Electric SUV
  • 1 day Solar to Become World's Largest Power Source by 2050
  • 2 days Sounds Familiar: Netanyahu Tells Arab Citizens They’re Not Real Israelis
  • 2 days THE DEATH OF FOSSIL FUEL MARKETS
  • 24 hours Biomass, Ethanol No Longer Green
  • 2 days Boeing Faces Safety Questions After Second 737 Crash In Five Months
  • 2 days Can OPEC CUT PRODUCTION FOREVER?
Markets Brace For U.S. Decision On Iran Sanction Waivers

Markets Brace For U.S. Decision On Iran Sanction Waivers

Several factors are creating upward…

Oil Prices Surge To Multi-Month Highs

Oil Prices Surge To Multi-Month Highs

Oil prices have surged to…

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