NEW YORK — OPEC and lower global oil prices delivered a one-two punch to the drillers in North Dakota and Texas who brought the U.S. one of the biggest booms in the history of the global oil industry.
Now they are fighting back.
Companies are leaning on new techniques and technology to get more oil out of every well they drill, and furiously cutting costs in an effort to keep U.S. oil competitive with much lower-cost oil flowing out of the Middle East, Russia and elsewhere.
“Everybody gets a little more imaginative, because they need to,” says Hans-Christian Freitag, vice president of technology for drilling services company Baker Hughes.
Spurred by rising global oil prices, U.S. drillers learned to tap crude trapped in shale starting in the middle of the last decade and brought about a surprising boom that made the U.S. the biggest oil and gas producer in the world.
When oil collapsed from $100 to below $50, once-profitable projects turned into money losers. OPEC added to the pressure by keeping production high. OPEC nations can still make good profits because their crude costs $10 or less per barrel to produce.
Now drillers and service companies are laying off tens of thousands of workers; smaller companies are looking for larger, more stable companies to buy them; and fears are rising of widespread loan defaults. OPEC said in a recent report that it expects U.S. production to begin to fall later this year, echoing a U.S. Energy Department prediction.
To compete, drillers have to find ways to get more oil out of each well, pushing down the cost for each barrel. Experts estimate that shale drillers pull up just 5 to 8 percent of the oil in place.
