Offshore drilling cutback significantly as prices dip
Deep-water spending down big as wild frontier goes coldThis looks like a rational decision given current market conditions. The choice to make $5 a barrel or lose $15 a barrel is a relatively easy one.
Global spending on deep-water oil and gas projects is down well more than 50 percent in less than three years with little hope for a rebound any time soon, experts said Wednesday at the Offshore Technology Conference at NRG Park.
Deep-water spending of about $45 billion in 2013 is projected to fall $20 billion this year and remain at those levels over the next couple years, said Julie Wilson, research director for global exploration at Wood Mackenzie consulting firm.
The break-even cost for most deep-water projects is about $60 per barrel of crude oil, she said, while some onshore shale developments may make money with oil as low as $40 a barrel, including some parts of Texas’ Permian Basin. The U.S. benchmark for oil is currently hovering just below $45 a barrel.