OPEC’s plan to kill U.S. hydraulic fracturing with low oil prices only made companies “leaner and more efficient,” according to the International Energy Agency (IEA).
“Recent reports tell us that the productivity of shale activity has improved in leaps and bounds,” reads the IEA report. “Whether it be shorter drilling times or larger amounts of oil produced per well, there is no doubt that U.S. shale industry has emerged from the $30 per barrel oil world we lived in a year ago much leaner and fitter.”
OPEC began flooding the global marketplace with oil in 2014 in an attempt to depress prices to counter competition, largely from fracking. Oil prices fell from $105 per barrel in June 2014 to only $29.04 per barrel in January 2016. OPEC’s recently announced production cuts sent crude prices to $52.04 per barrel.
Its strategy to kill fracking backfired, however, and just made the process more efficient. U.S. oil production levels remained relatively constant despite low oil prices and declining investment. Companies such as ExxonMobil and Royal Dutch Shell were already investing $20 billion into fracking technology in August.
The total number of drilling rigs in select regions dropped by 64 percent, from a high of 1,309 rigs in October 2014 to only 475 in December 2015. But the decline in rigs was only accompanied by an 8 percent drop in production, according to the EIA report.
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