oil rig

(EconomicCalendar.com) Costs associated with shale oil exploration and production decreased by a third in 2015 thanks to implementation of more effective technologies. Experts are certain that this could affect crude oil prices in the short term.

Costs beared by US shale producers shrunk by 25-30% last year in comparison to their decade high in 2012. This is attributed to the usage of advanced technology that improved the effectiveness of both well drilling and post-drilling well development, according to research conducted by the energy industry consultant IHS Global Inc. and commissioned by the Energy Information Administration (EIA).

IHS has conducted research in the US’s largest shale oil production regions of Eagle Ford, Bakken, Marcellus and Permian.

When compared to figures from 2014, the cost of putting a single oil well online decreased by 7-22% last year. The experts at IHS believe that keeping exploration and production costs lower can have an impact on oil prices in the short term and effect prices for other energy sources as well. In the wake of crude prices recovering from February’s 12-year low, shale producers have lifted production from its previously frozen levels in mid-March.

Companies like Pioneer Natural Resources (PXD) and Oasis Petroleum (OAS) plan on recovering from 70 to 85 percent of their oil production, provided that minimum returns can be obtained.

“US shale oil was never going to stand still,” – John Richardson of ICIS commented on these technological breakthroughs. Source: U.S. Energy Information Administration