by shallow sand » Mon 16 Feb 2015, 02:31:46
Mick22. I note you are new posting here and so I do not know your background.
In any event, if you are not aware, please familiarize yourself with the tremendous cost difference between operating oil and gas wells versus the cost of drilling and completing them. In particular, please review this as pertains to the horizontal "shale" oil and gas wells, which have driven US oil and gas production growth in recent years.
Also, please familiarize yourself with the various "lag times" which occur not only with the time between drilling and completion, but also state reporting of oil and gas production. Note also that the EIA weekly estimates are just that, and that they are routinely revised. The states have the true production info first, although Texas info is not complete for many months.
As you may know, the main stream media many times does not differentiate and, at least to me, it is infuriating. Also, some who post here fail to differentiate.
You are absolutely correct that almost no PRODUCING oil or gas wells will be shut in at current prices. The ones that will be are marginal producers, and will not affect overall US production that much. Producers will operate many of these wells at a loss, at least for awhile, as there are various reasons why shutting them in is problematic.
On the other hand, drilling and completing of new wells appears to have been affected quite a bit by the significant drop in oil and gas prices, with rigs being taken out of service in large numbers. It is too early to tell what the result will be on oil production, on my opinion, although my guess is in a few months overall US oil production will level and then begin to slowly fall if oil rig counts fall to 800 or less.
You may already know everything I posted, and if you do, I apologize. There are some people who post here and on PeakOilBarrel.com regularly who are very knowledgeable about US oil and gas production, more so than me, and it is worthwhile to read both their factual information, as well as their opinions.