Bigger Bakken Wells and Lower Drilling Costs

The price of crude oil continues to match six-year-lows, but don't expect that to curtail development in the Bakken oil fields.

An industry analysis by Bloomberg Business suggests that even at crude oil prices of $75 a barrel, some areas of Bakkenshale are still profitable, dispensing older notions that the price of oil has to be very high for oil shale fields to be worth the investment.

Experts say the marginal cost to produce oil has shrunk dramatically, making it profitable for companies to continue pumping oil at near a 40-year record high level despite the falling price for crude oil. In early August, the price for Bakkencrude dropped to $75.58 per barrel, the lowest it has been since March, but the Bloomberg analysis indicates it is unlikely production will be slowed or halt because of the lower pricing.

At the beginning of the oil slump, some experts had claimed that Bakken shale needed $70 a barrel to break even, but newer estimates say that in some areas the break-even point is only about $29 a barrel. The experts agree it varies widely across the oil field and often from well to well. One producer told Bloomberg that at $50 a barrel, it would see an after-tax return, or profit, of about 75 percent on its best plays.

For workers in the Bakken field, however, the lower oil price trend is not good news. A lower sale price for oil is virtually guaranteed to mean companies ask employees to do more with less; that means lower numbers of wells, fewer people, and more work, potentially increasing the likelihood of work-related accidents.

If the need for lower production costs results in an injury to you or your loved ones, contact us to discuss you legal rights to compensation.

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