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Crude oil and natural gas have been major pillars of the modern civilization during the past century. They are among the most valuable depletable global resources. The energy market has witnessed many oil price shocks during the past several decades. Such instabilities have impacted the global oil and gas industry in ways that have included disruption of investment in the infrastructure, slowdown of advancements in technology development, and backwardness on attracting and training creative solution providers. OPEC (Organization of Petroleum Exporting Countries) has been partly blamed for instigating such price instabilities. Recently, and since the latter part of 2014, in the fear that the shale resource developments may affect the market share of the OPEC producers, oil prices have dropped significantly because of OPEC countries, while suffering losses to their own economies, flooded the market with cheap oil. The global oil industry is now facing a similar situation it has faced several times during the last three decades.
Advantages and disadvantages of low oil prices for both net exporters and net importers of crude oil, as well as the global economy, have been extensively discussed in the literature. Based on the available statistics, while in the short terms, OPEC producers may regain their market shares by producing low cost conventional oil and discouraging shale oil and gas developments, in the long runs, this might not be a successful strategy. OPEC countries in few decades will be paying a high price when their conventional resources reach to levels barely satisfying their domestic needs. Furthermore, because of current orchestrated low prices for shale resources they are preventing their own countries from investing in the development of unconventional resources in terms of technology, manpower and pace of development. In this study we examine the potential of source rock development in some OPEC countries and discuss the importance of realizing the real value of crude oil when it gets to pricing a depletable resource and considering the substitution cost.
The issue of water needs for shale resource development has largely focused on public concern about possible constraints on water supplies, particularly in areas suffering from drought. A new study suggests that without technological breakthroughs or changes in how the oil and gas industry manage water, development of shale production could be hampered in areas with the largest estimated reserves. Some cities in the United States suffering from drought have imposed bans on hydraulic fracturing, even though oil and gas industry water use compares favorably with that of other industries (see Beyond the Headlines, July 2014 JPT, p. 20). The new report issued by the World Resources Institute, titled "Global Shale Development: Water Availability and Business Risk," focuses not on public concerns, but energy company risk instead. It contends that water-availability challenges could limit shale resource development on six continents, including in areas with some of the greatest potential for shale production. The report's executive summary looks at three countries in particular and assesses the potential water challenges.
This paper studies the impact of the US Unconventional Play (shale/tight oil/gas) Revolution on Deepwater industry, and on global energy landscape. The discussions are focus on,
What are the contributions of shale oil/gas to future US and global energy landscape?
Have the high development costs, environmental challenges, and low oil price impair this contribution?
How will the Deepwater industry live while facing the impact of low oil price and the Unconventional Revolution?
The unconventional play development in the US has unlocked massive shale oil/gas reserves, and has been considered as the biggest game changer of recent years. US has become the number one unconventional oil and gas producer in the world. Influenced by the US success, the global unconventional play exploration had been active until the market downturn.
Historical data are analyzed. Relationships among crude price/production/Dollar value/investment tendency are explored. Characteristic differences between unconventional onshore and offshore development are compared. The new movement of shale play development and its long-term impact on Deepwater and global energy landscape are discussed.
There are a numerous discussion in the industry around how the new trends of renewable energy may sunset the fossil energy industry, this paper will address this as well.
The cliff-drop in the oil price has forced both onshore and offshore producers to focus on significantly cutting development and production cost, in order to lower their break-even price to below the current market oil price level. Technologies for development and for operation excellence are the key contributors for both Deepwater and Unconventionals when facing the long term stagnant low oil price. This paper will present the findings of the study.