SwimExpert
Gold Member
- Nov 26, 2013
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- #41
it's also gambling that once mothballed, the US fracking/Shale wells will be difficult to get back into service. From what I know about the process, they should be pretty quick to clean up and turn back on, thus softening any rise in prices.
Whether that is a good gamble or not, I'm not sure. Part of lowering the costs has been for oil producers to become more picky about where they drill, and where they are allocating their rigs. I saw some article not long ago that had an interesting graph which showed that as domestic production has increased the total number of rigs in the US has decreased dramatically. Producers are focusing their efforts on selecting the best producing areas, and are moving rigs around to work the crap out of those areas. After about the first year of production, a fracked well tends to see a dramatic reduction in output. So, it's alot of collect it while it's gushing and forget about it later. So, on one hand, I don't think it's all that easy to just turn it back on later. But on the other hand, once the well is operational the expensive part is done and there is little money to be saved by shutting down, even if the selling price is low.