Oil prices have finally crept up on drilling and production levels in the US, a report said, adding that the onshore rig count has continued to soften as many operators have chosen to wait for improved economics to continue operations.

In other cases, smaller companies such as Sampson and Quicksilver Resources, have filed for bankruptcy protection amid economic stress – and more are likely coming with bank borrowing base assessments in October, explained the note by Douglas-Westwood Houston, a leading provider of market research and consulting services to the energy industry worldwide.

Slowing operations have led to a half a million bpd decrease in US production since April. While oil prices are very difficult to predict in the short-term and many do not expect a rapid price recovery, added confidence in the global oil supply/demand balance could help push some larger scale projects forward.

Large-scale developments with proprietary designs do not have the optionality of shale developments. Many long-lead offshore and oil sands projects have already been sanctioned and some have much of the major capital costs sunk – making full project break-even figures much less relevant than shale investments with steep production curves. In this case, long-term high-capital cost developments are likely to be pushed forward as they can be 30-year producing prospects and are not easily scalable to the short term environment.

So what does this mean for unsanctioned projects? Numerous IOCs are waiting to see if the U.S. production decline is signalling a bottoming out of the oil price slide.

Then begins a process of re-evaluation of their own asset portfolio in the new price and development cost environment. Schlumberger’s acquisition of Cameron displayed their observed importance of reducing costs for their customers through supply chain efficiencies. Future commitments to new developments will be driven not just by the oil price but also through the ability of the supply chain to deliver cost efficiencies. – TradeArabia News Service