HOUSTON, July 13 (UPI) -- Energy companies are growing accustomed to low oil prices, though some projects still may be left on the shelf if markets stay put, Wood Mackenzie finds.
Citing "capital constraints," LNG Canada, a joint venture between Shell and Asian energy partners, said this week it was delaying a final investment decision for a liquefied natural gas terminal in British Columbia. The Organization of Petroleum Exporting Countries said in its monthly market report, meanwhile, U.S. oil production was on the decline in part because of weaker market conditions.
Despite major recovery in relative terms, crude oil prices are still about 50 percent less than they were two years ago. Analysis emailed Wednesday from consultant firm Wood Mackenzie finds 70 percent of new drilling planned is economical at a price point below $60 per barrel.
Patrick Gibson, an oil supply researcher for the firm, said up to 13 million new barrels of oil per day could be developed both in shale and conventional oil basins by 2025.
"Global breakeven costs for these developments have fallen by $19 per barrel to the current weighted average of $51 per barrel since the peak in 2014 and by $8 per barrel over the past 12 months," he said in a statement.
More than half of that new production comes from U.S. shale basins in the Lower 48 states, where companies are growing more efficient. For the fifth time in six weeks, weekly data from oil services company Baker Hughes show an increase in U.S. rig activity, signaling drillers are more confident.
Nevertheless, Wood Mackenzie found commercial constraints exists outside of shale. Some projects, the firm said, remain out of reach until oil prices recover to $60 per barrel.
A briefing from the U.S. Energy Information Administration, meanwhile, envisions oil back above $100 per barrel by 2030.