Introduction – US tight oil costs

If you are looking for true cost data of US tight oil, you get very different answers from source to source, and the sources almost never specify the underlying data and assumptions. The analysis presented in the following chapters tries to improve on that situation.

Several regions in the US produce tight oil, but the purest tight oil play is the Bakken region. In other regions, besides oil, wells produce a significant amount of gas, making the calculation of costs attributable to oil arbitrary. The Permian region, by contrast, has a significant amount of conventional oil production, but the available data do not clearly distinguish between tight and conventional oil.

Therefore, the analysis focuses on the North Dakota part of the Bakken formation (around 97% of total US Bakken). Are tight oil production costs in other areas significantly different from the Bakken’s’? There is no evidence indicating that. In 2014, it was said that Eagle Ford had the lowest break even costs and Permian the highest, but in 2015 Eagle Ford’s rig count has fallen much more than Permian’s.

To get realistic oil cost data, the most recent empirical peak production and decline curves data were derived from a database based on official North-Dakota tight oil data, complemented by data from a commercial database. On the cost side, data from 9 pure tight oil Bakken producers were analyzed. Both datasets form the basis of transparent calculations of 2014 and later tight oil costs.

It is intended to update certain information presented here every few months, as more data, especially production data, become available. Certain chapters containing such data have been updated in March 2016.