How Has the Oil Slump Affected Fracking?

It’s no longer speculation and prediction – we’re in the middle of an oil slump. Prices have fallen, leaving less incentive for companies to launch new exploration and production projects. As a consequence, less oil is being produced from oil rigs. However, it might not be the same situation for shale drilling sites.

Oil slump

The Organization of the Petroleum Exporting Countries (OPEC) is at the centre of oil operations for some of the biggest oil producing countries in the world. They have fourteen members including Saudi Arabia, Iraq and Libya. They tried to control the downturn in the oil industry by organising a slow in production. Sadly, Saudi Arabia didn’t oblige and the industry has continued to tumble somewhat. With more supply than demand, oil companies are in a price war, competing to supply the same countries.

Fracking through the slump

On the other hand, the shale industry, particularly in the United States, seems to be relatively stable. Why? Basically, when they started fracking, the US had such high costs, they were hardly able to get by. The process was new to them, so they were doing things the only way they knew how – which wasn’t necessarily the best or most cost-efficient way.

However, as time has gone on the fracking industry has evolved. They have still suffered from falling oil prices, but it has been counteracted as they have been evolving at the same time. They knew they had to develop and so innovations have allowed them to lower costs over time. Since 2014, in fact, their costs have dropped by around 40 percent.

Other contributing factors

Their success is also partly down to a difference in markets. In the US, there has been a drive to become self-sufficient. A lack of dependency on other nations has made their own oil industry stronger – and fracking is become a bigger part of it. So now, while offshore oil is still struggling, America’s shale industry is actually expanding.

Positivity for fracking?

Arguments on fracking are definitely polarised. Some people love it and some hate it. There is certainly plenty of people voicing their opinions against the process, but what about those in favour. Chris Faulkner is the CEO of the Breitling Energy Corporation. His outspoken advocacy of shale and knowledge of the process has led to him being known as the ‘Frack Master’. He gives his side of the story in ‘Is Fracking the Way Forward? An Interview with Chris Faulkner’.