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Abstract

Summary

The drilling of new oil and gas wells fell dramatically after the price crash that started in 2014. Between December 2014 and July 2015, rig counts fell by more than half. By mid-2016, they were down by four fifths. As a result, total USA crude oil production fell by about 12%. Although there has been recovery in recent months, still less than a third of rigs are turning compared to 2014. The ability of American producers to react quickly to price pressures by reducing production was lauded both by industry and the popular press. However, it is unclear how much the public understands that the reduction was not accomplished by turning a valve that can instantly be reopened. Production fell because unconventional wells, which make up an increasingly large share of the total, decline very quickly. Turning them back on requires drilling, which requires capital investment.

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/content/papers/10.3997/2214-4609.201700948
2017-06-12
2024-03-28
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References

  1. MikaelHöök, RobertHirsch, KjellAleklett
    , 2009. Giant oil field decline rates and their influence on world oil production. In Energy Policy, Volume 37, 2009 Issue 6, Pages 2262–2272.
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