Efficiency focus helping US firms weather oil price war

ALTHOUGH some US oil companies are struggling with low oil prices, a new wave of innovation is hitting the oil patch, allowing for a significant reduction in drilling costs.

A variety of different improvements in production are starting to show up at all levels across the industry from small firms to oil majors. Statoil, for example, recently noted that it is experimenting with different types of sand and chemicals to improve production. And a number of companies have noted that they are moving from drilling wells one at a time, on an ad hoc basis, to drilling multiple wells at once. GE Oil & Gas has produced variable-use pumps that can be turned on and off in order to save energy versus the previous 24-hour a day operation cycle.

The end result of these actions is that per-barrel costs of oil have fallen to around US$60 today versus US$75 a year ago according to Citi analysts. And executives from oil companies are now forecasting that per barrel prices could fall to US$50 or less before long. America has not yet lost the price war.