The boom in US shale production has been helping to keep North Sea prices down but as I’ve pointed out more than once before, shale’s future is built on fast disappearing sand. See:
Further, increasing fears over safety and insurance costs are keeping investors back. Fracking kills workers and people living near the pipelines or wells. See this most recent example:
‘Two months after a Colorado home exploded near an Anadarko Petroleum Corp. well, the reverberations are still rattling the oil industry, driving down driller shares and raising fears of a regulatory backlash. The April 17 blast, which killed two people and injured a third, was followed a month later by a second deadly explosion at an Anadarko oil tank in the state.
Now it looks likely that fracking has further concerns of longer-term viability. See this from Bloomberg.com:
‘Unlike offshore wells in the GOM [Gulf of Mexico], which can produce for decades, shale wells can peak within months and sometimes cease after two years. Eager explorers may undercut the life of wells by over-drilling, said Russell Clark, investment manager at Horseman Capital Management. So-called frack hits occur when drilling in one well interferes with another, causing a pressure transfer that can disrupt or stop production…. As production from wells rapidly declines, drillers are rushing to add new ones at a faster pace in order to keep increasing output. The problem is that drilling multiple wells closer together is contributing to the drop in established ones, and sometimes causing harm that can’t be fixed…..Output from legacy wells — a term that in the fast-pace shale world includes those that are just a month old — is dropping by 350,000 bpd and has fallen steeply since 2012, according to data from the U.S. EIA.’
A ‘legacy’ well can be just one-month-old? Once more, the mid to longer-term future of revenue from the North Sea seems secure.