Fresh analysis by Wood Mackenzie has shown 70% of new drilling in US tight oil plays and pre Final Investment Decision (FID) conventional oil projects are commercial at $60 oil.
Data has revealed despite the collapse in oil prices two years ago, the industry has now started to adapt to lower oil prices, cutting costs, and getting more projects over the economic threshold.
Future commercial supplies have been seen to be increasing again.
Patrick Gibson, global oil supply research director for Wood Mackenzie, said:“A total of 13 million b/d of new supply could be developed from both tight oil and conventional projects by 2025. Global breakeven costs for these developments have fallen by US$19/bbl to the current weighted average of US$51/bbl since the peak in 2014 and by US$8/bbl over the past 12 months”.
Of the 13 million b/d, 9 million b/d is commercial at US$60/bbl Brent. This is more than at any point since 2009 and 1.5 million b/d more than a year ago.
Most of the 9 million barrels per day is US tight oil, with productivity improvements and cost deflation in the key growth plays making more tight oil economically viable.
Wood Mackenzie said the big winners in this dynamic are the incumbent operators in the key tight oil growth plays such as in the Mid-Continent and Permian Basin: US Independents such as EOG, Pioneer, Continental and Apache; and among the majors, ExxonMobil and Chevron.