Dwindling crude prices: Hard knocks on shale oil development

The global attention towards the development of shale oil may have continued to suffer setback, as the hope of nations on the assessed world energy changer gets dimmer owing to sliding crude prices.

Indeed, oil multinationals that were wholly committed to the shale projects are now having a rethink, as the projects become more uneconomical by the day.

Shale oil producing countries, such as Turkey, Ukraine and Argentina, Romaian , Poland and Hungary, Germany and South Africa, are now left at crossroads on the way forward to oil boom.

In a latest development, Royal Dutch Shell is pulling back from its shale projects in South Africa due to lower energy prices although it is still seeking an exploration license for the onshore Karoo Basin.

Shell’s South Africa Chairman Bonang Mohale, said a more than halving of crude oil prices since June last year has put high cost projects such as shale gas exploration in jeopardy around the globe.

“The reason to go to a low cost holding position … is as a result of a difficult period for
world (prices),” Mohale said.

Shell’s retreat is a blow to the South African government, which has been criticised by oil firms for delaying issuing exploration licenses, most notably in the Karoo, which is believed to hold up to 390 trillion cubic feet of technically recoverable reserves.

Besides, Chevron Corporation and Exxon Mobil Corporation have reportedly packed up nearly all of their hydraulic fracturing wildcatting in Europe, Russia and China, due to economic considerations for shale oil.

Chevron halted its last European fracking operations in February when it pulled out of Romania. Shell said it is cutting world-wide shale spending by 30 per cent in places including Turkey, Ukraine and Argentina. Exxon has pulled out of Poland and Hungary, and its German fracking operations are on hold.

Though the fracking boom has taken off in the U.S. like no other place, the U.S. actually possesses less than 10 per cent of the world’s estimated shale reserves.