Analyst: Impossible for Saudis to destroy U.S. shale industry

Because of its mid-cost nature, compared to the high cost of conventional drilling, shale will rebound quickly, according to Daniel Yergin, founder of IHS Cambridge Energy Research Associates, who said groups are already in place to grab the assets of bankrupt U.S. shale drillers.

“The management may change and the companies may change but the resources will still be there,” Yergin told the Daily Telegraph.

“It takes $10 billion and five to ten years to launch a deep-water project. It takes $10 million and just 20 days to drill for shale,” Yergin said at the World Economic Forum in Davos, Switzerland.

“Shale has proven much more resilient than people thought. They imagined that if prices fell below $70 a barrel, these drillers would go out of business. They didn’t realize that shale is mid-cost, and not high cost.”

Zhu Min, the deputy director of the International Monetary Fund, said U.S. shale has changed the balance of power in the global oil market and there is little the Saudis and OPEC can do about it.

“Shale has become the swing producer. OPEC has clearly lost its monopoly power and can only set a bottom for prices. As soon as the price rises, shale will come back on and push it down again.”

Full article: Analyst: Impossible for Saudis to destroy U.S. shale industry (World Tribune)

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