You are here
Home > BLOG > Shale gas and Tight oil economical evaluation > Tight oil market dynamics: Benchmarks, breakeven points,and inelasticities

Tight oil market dynamics: Benchmarks, breakeven points,and inelasticities

Fig. 7. U.S. tight oil and shale gas drilled but uncompleted wells (EIA, 2017b) (dotted curve, right axis) and West Texas Intermediate crude oil price (EIA, 2017c) (solid curve, left axis) from January 2014 to April 2017.


Alberta, 2016    Alberta    Oil prices (2016), Accessed 16th Dec 2016

Apache, 2016    Apache    Apache Corporation Discovers Significant New Resource Play in Southern Delaware Basin, 7 September 2016    (2016)

Baker Hughes, 2016    Baker Hughes    North America Rotary Rig Count, September 2016    (2016)

Bloomberg, 2014    Bloomberg    Break-Even Points for US Shale Oil, 17 October 2014    (2014)

Bloomberg, 2016    Bloomberg    Big Oil Gobbles Up Record Debt as Borrowing Costs Decline, May 13, 2016    (2016)

Bornstein et al., 2017    G. Bornstein, P. Krusell, S. Rebelo    Lags, costs, and shocks: An equilibrium model of the oil industry    National Bureau of Economic Research Working Paper 23423 (2017)

BP, 2016    BP    BP Statistical Review of World Energy, June 2016    (2016)

Brackett, 2014    B. Brackett    My perspective on global geopolitical risk, EIA conference, 15 July 2014 (2014), Accessed 25th Jun 2017

Braziel, 2016    E.R. Braziel    The Domino Effect    NTA Press (2016)

Brealey et al., 2009    R. Brealey, S. Myers, A. Marcus, E. Maynes, D. Mitra    Fundamentals of Corporate Finance    McGraw-Hill Ryerson (2009)

Carr, 2017    H. Carr    Need You Now – The Strategic Petroleum Reserve’s Muted Effect in the Shale Era    RBN Energy (2017)    (29 January 2017)

Clayton and Levi, 2015    B. Clayton, M. Levi    Fiscal Breakeven Oil Prices: Uses, Abuses, and Opportunities for Improvement    Council on Foreign Relations (2015)    (November 2015)

Cosse, 1993    R. Cosse    Chap. 8    Basics of Reservoir Engineering, Editions Technip, Paris (1993)

Domanski et al., 2015    D. Domanski, J. Kearns, M. Lombardi, H.S. Shin    Oil and debt    BIS Q. Rev (2015), pp. 55-65    (March 2015)

EIA, 2013    EIA    Price difference between Brent and WTI crude oil narrowing    Today in Energy, US Energy Information Administration (2013)    (28 June 2013)

EIA, 2014    EIA    As cash flow flattens, major energy companies increase debt, sell assets    Today in Energy, US Energy Information Administration (2014)    (29 July 2014)

EIA, 2015a    EIA    U.S. oil production growth in 2014 was largest in more than 100 years    Today in Energy, US Energy Information Administration (2015)    (30 March 2015)

EIA, 2015b    EIA    Annual Energy Outlook 2015, DOE/EIA-0383 (2015)    US Energy Information Administration (2015)    (April 2015)

EIA, 2015c    EIA    Major fossil fuel-producing states relay heavily on severance taxes    Today in Energy, US Energy Information Administration (2015)    (21 August 2015)

EIA, 2015d    EIA    US onshore producers face challenging times    This Week in Petroleum, US Energy Information Administration (2015)    (10 September 2015)

EIA, 2016a    EIA    Initial production rates in tight oil formations continue to rise    Today in Energy, US Energy Information Administration (2016)    (11 February 2016)

EIA, 2016b    EIA    Oil production in federal Gulf of Mexico projected to reach record high in 2017    Today in Energy, US Energy Information Administration (2016)    (18 February 2016)

EIA, 2016c    EIA    Trends in U.S. Oil and Natural Gas Upstream Costs    US Energy Information Administration (2016)    (March 2016)

EIA, 2016d    EIA    Wells drilled since start of 2014 provided nearly half of lower 48 oil production in 2015    Today in Energy, US Energy Information Administration (2016)    (22 March 2016)

EIA, 2016e    EIA    Hydrocarbon gas liquids production and related industrial development    Annual Energy Outlook 2016, US Energy Information Administration (2016)    (20 June 2016)

EIA, 2016f    EIA    What Drives Crude Oil Prices?    US Energy Information Administration (2016)    (12 July 2016)

EIA, 2016g    EIA    Short Term Energy Outlook    US Energy Information Administration (2016)    (12 July 2016)

EIA, 2016h    EIA    U.S. oil companies closer to balancing capital investment with operating cash flow    Today in Energy, US Energy Information Administration (2016)    (18 July 2016)

EIA, 2016i    EIA    Shale in the United States, Energy in Brief    US Energy Information Administration (2016)    (updated 20 July 2016)

EIA, 2016j    EIA    Future U.S. tight oil and shale gas production depends on resources, technology, markets    Today in Energy, US Energy Information Administration (2016)    (22 August 2016)

EIA, 2016k    EIA    Drilling Productivity Report    US Energy Information Administration (2016)    (12 September 2016)

EIA, 2016l    EIA    EIA now provides estimates of drilled but uncompleted wells in major production regions    Today in Energy, US Energy Information Administration (2016)    (September 14, 2016)

EIA, 2016m    EIA    Weekly Cushing OK WTI Spot Price FOB    US Energy Information Administration (2016)    (21 September 2016)

EIA, 2016n    EIA    Henry Hub Natural Gas Spot Price    US Energy Information Administration (2016)    (13 October 2016)

EIA, 2016o    EIA    US crude oil by rail = PET&s = ESM_EPC0_RAIL_NUS-NUS_MBBL&f = M (2016), Accessed 16th Dec 2016

EIA, 2017a    EIA    Short-Term Energy Outlook, Tables 3a, 4a    US Energy Information Administration (2017)    (9 May 2017)

EIA, 2017b    EIA    How much shale (tight) oil is produced in the United States? = 847&t = 6 (2017), Accessed 27th Jun 2017

EIA, 2017c    EIA    Weekly Cushing OK WTI Spot Price FOB    US Energy Information Administration (2017)    (17 May 2017)

EPA, 2016    EPA    The Social Cost of Carbon    US Environmental Protection Agency (2016)    updated 23 February 2016

EY, 2014    EY    US upstream: costs, prices and the unconventional treadmill$FILE/EY-US-upstream-costs-prices-and-the-unconventional-treadmill.pdf (2014)

EY, 2015    EY    Global Oil and Gas Tax Guide    (2015)    

Ezrati, 2015    M. Ezrati    America: oil’s new swing producer, National Interest    11 August 2015 (2015)

Financial Times, 2016    Financial Times    Amid the Oil Price Crash, Rosneft is Running to Stand Still    Financial Times (2016)    (23 March 2016)

Gladstone et al., 2016    A. Gladstone, M. Halftermeyer, A. Plough    Dangers in the Deep: A $40 billion Time-bomb Threatening the Gulf    Debtwire (2016)    12 September 2016

Goldman Sachs, 2017    Goldman Sachs    Top Projects 2017    (2017)    (25 May 2017)

Greenstone and Looney, 2012    M. Greenstone, A. Looney    Paying too much for energy? The true costs of our energy choices    Daedalus, 141 (2) (2012), pp. 10-30

Gulen et al., 2015    G. Gulen, S. Ikkonikova, J. Browning, K. Smye, S. Tinker    Production Scenarios for the Haynesville Shale Play, SPE-176022    SPE Economics & Management (2015)    (October 2015)

Haynes and Boone, 2016a    Haynes & Boone    Oil Patch Bankruptcy Monitor, October 19, 2016    (2016)

Haynes and Boone, 2016b    Haynes & Boone    Oilfield Services Bankruptcy Monitor, October 25, 2016    (2016)

HEI, 2015    HEI    Strategic Research Agenda on the Potential Impacts of 21st Century Oil and Natural Gas Development in the Appalachian Region and Beyond    Health Effects Institute (2015)    October 2015

Herrnstadt et al., 2017    E. Herrnstadt, R. Kellogg, E. Lewis    Information Asymmetry, Drilling Distortions, and Oil and Gas Leases    (2017)    (preprint)

Hunter et al., 2015    W. Hunter, M. Turner, J. Villalobos, J. Baihly, A. Pena    Systematic candidate selection improves Haynesville refracturing economics    World Oil, 236 (12) (2015), pp. 67-72    (December 2015)

IEA, 2013    IEA    Decline rate analysis    World Energy Outlook 2013, International Energy Agency (2013)

IEA, 2014    IEA    World Energy Investment Outlook, Annex A – Investment Tables    International Energy Agency (2014)

IHS, 2013a    IHS    Tight Oil Brings the Swing Era Back to the United States, August 2013    (2013)

IHS, 2013b    IHS    Bakken Shale Workbook, August 2013    (2013)

IHS, 2015a    IHS    What’s Cost Got to Do with it? How Oil Prices and Upstream Costs Help Shape Each Other, July 2015    (2015)

IHS, 2015b    IHS    US Gas Forecast: Associated Gas Setting Up for Recovery? November 2015    (2015)

IHS, 2016    IHS    Low Operating Costs Make Russian Oil Production Economic Even at Very Low International Oil Prices, April 2016    (2016)

IHS, 2017    IHS    Making Ends Meet: How the Oil Industry Is Cutting Costs to Make up for Lower Prices, May 2017    (2017)

Ikonnikova et al., 2015    S. Ikonnikova, J. Browning, G. Gulen, K. Smye, S. Tinker    Factors influencing shale gas production forecasting: empirical studies of Barnett, Fayetteville, Haynesville, and Marcellus Shale plays    Econ. Energy Environ. Policy, 4 (2015), pp. 19-35

IMF, 2016    IMF    Regional economic outlook, Middle East and Central Asia, International Monetary Fund, October 2016; see Statistical Appendix (2016)

IRS, 2005    IRS    Internal Revenue Cumulative Bulletin 2005-1, January–June, Part III – Administrative, Procedural, and Miscellaneous; Nonconventional Source Fuel Credit, §29 Inflation Adjustment Factor and §29 Reference Price; Notice 2005-33    US Internal Revenue Service (2005)

IRS, 2016    IRS    Costs You can Deduct or Capitalize, Internal Revenue Service Publication    535 (2016)    (Chap. 7)

Jackson et al., 2016    T. Jackson, K.P. Green, K. Sholes    Global Petroleum Survey    Fraser Institute (2016)

Jackson et al., 2014    R.B. Jackson, A. Vengosh, J.W. Carey, R.J. Davies, T.H. Darrah, F. O’Sullivan, G. Petron    The environmental costs and benefits of fracking    Annu. Rev. Environ. Resour., 39 (2014), pp. 327-362

Jacobs, 2015    T. Jacobs    Halliburton reveals refracturing strategy    J. Pet. Technol., 67 (11) (2015), pp. 40-41    (November 2015)

Kleinberg, 2014    R.L. Kleinberg    Technology on the horizon & over the horizon    EIA Energy Conference, 15 July 2014 (2014)

Kleinberg, 2017    R.L. Kleinberg    Unconventional fossil fuels    M.J. Aziz, A.C. Johnson (Eds.), Introduction to Energy Technology: Depletable and Renewable, Wiley-VCH (2017)    (forthcoming)

Krane and Agerton, 2015    J. Krane, M. Agerton    OPEC imposes ‘swing producer’ role upon U.S. shale: evidence and implications, IAEE Energy Forum, third quarter 2015 (2015)

Labandeira et al., 2016    X. Labandeira, J. Labeaga, X. Lopez-Otero    A meta-analysis on the price-elasticity of energy demand    Robert Schuman Centre for Advanced Studies, European University Institute, Working paper RSCAS 2016/25 (2016)

Likvern, 2012    R. Likvern    Is shale oil production from Bakken headed for a run with “The Red Queen”?    The Oil Drum (2012)    25 September 2012

Lindsay et al., 2016    G.J. Lindsay, D.J. White, G.A. Miller, J.D. Baihly, B. Sinosic    Understanding the Applicability and Economic Viability of Refracturing Horizontal Wells in Unconventional Plays, Society of Petroleum Engineers Paper SPE 179113    (2016)

Mankiw, 2011    N.G. Mankiw    Principles of Economics    (Fifth edition), South-Western Cengage Learning (2011)

Maugeri, 2013    L. Maugeri    The Shale Oil Boom: A U.S. Phenomenon, Discussion Paper 2013-05    Belfer Center for Science and International Affairs, Harvard Kennedy School (2013)    (June 2013)

McNally, 2015    R. McNally    Commentary: Welcome Back to Boom-Bust Oil Prices    Columbia University Center on Global Energy Policy (2015)    (17 December 2015)

Metcalf, 2018    G.E. Metcalf    The impact of removing tax preferences for U.S. oil and natural gas production    J. Assoc. Environ. Resour. Econ., 5 (1) (2018), pp. 1-37    (January 2018)

Munro, 2014    D. Munro    “Effective” OPEC Spare Capacity: Reality-based Data, IEA Energy, Issue 7, 4th Quarter 2014    (2014)

Nasta, 2016    S. Nasta    DUC, DUC, Produce – The New EIA DUC Estimates and U.S. Oil & Gas Production, RBN Energy, 28 September 2016    (2016)

North Dakota Department of Mineral Resources, 2015    North Dakota Department of Mineral Resources    Testimony before North Dakota House Appropriations Committee    8 January 2015 (2015)

OPEC, 2016    OPEC    World Oil Outlook 2016    Organization of the Petroleum Exporting Countries (2016)    (October 2016)

Oran and Reiner, 2016    R. Oran Jr., D. Reiner    Who Is Responsible for Decommissioning Costs for Oil and Gas Assets Abandoned or Sold in Bankruptcy?    American Bar Association (2016), Accessed 25th Jun 2017    (26 February 2016)

Pioneer Natural Resources, 2016    Pioneer Natural Resources    Investor Presentation    (2016)    (September 2016)

Sandrea, 2012    R. Sandrea    Evaluating production potential of mature US oil, gas shale plays    Oil Gas J., 110 (12) (2012)    (3 December 2012)

Sandrea, 2014    I. Sandrea    US Shale Gas and Tight Oil Industry Performance: Challenges and Opportunities    Oxford Institute for Energy Studies (2014)    (March 2014)

Schlumberger, 2015    Schlumberger    Third Quarter 2015 Results, 15 October 2015    (2015)

Seeking Alpha, 2016    Seeking Alpha    Schlumberger’s (SLB) CEO Paal Kibsgaard on Q3 2016 Results – Earnings Call Transcript, 21 October 2016    (2016)

Shaw and Kleinberg, 2017    J.H. Shaw, R.L. Kleinberg    Oil and natural gas    M.J. Aziz, A.C. Johnson (Eds.), Introduction to Energy Technology: Depletable and Renewable, Wiley-VCH (2017)    (forthcoming)

Smith, 2014    J.L. Smith    The Option to Hold a Petroleum Lease by Production: A User’s Guide to the Shale Gas Drilling Boom    SSRN (2014), 10.2139/ssrn.2531997

Smith and Lee, 2017    J.L. Smith, T.K. Lee    The Price Elasticity of U.S. Shale Oil Reserves    Energy Econ., 67 (2017), pp. 121-135

Texas, 2005    Texas    Individual & Blanket Performance Bonds – Letters of Credit or Cash Deposits – For Wells and Other Oil and Gas Operations, Railroad Commission of Texas    December 2005 (2005), Accessed 25th Jun 2017

Texas, 2016    Texas    Property Tax Code 23.17, Mineral Interest Not Being Produced, Rendered on 10 February 2016    (2016)

The Economist, 2014    The Economist    Sheikhs v Shale, 6 December 2014    (2014)

The Economist, 2015    The Economist    After OPEC, 16 May 2015    (2015)

USGS, 2016    USGS    National oil and gas assessment methodology, US geological survey (2016), Accessed 12th Jan 2016

Wall Street Journal, 2014    Wall Street Journal    The New Winners and Losers in America’s Shale Boom, 21 April 2014    (2014)

Wang and Krupnick, 2013    Z. Wang, A. Krupnick    A Retrospective Review of Shale Gas Development in the United States, Resources for the Future, RFF DP 13-12    (2013)

Wood Mackenzie, 2014a    Wood Mackenzie    Bakken/Three Forks Key Play Report, March 2014    (2014)

Wood Mackenzie, 2014b    Wood Mackenzie    Wolfcamp Key Play Report, June 2014    (2014)

Wood Mackenzie, 2014c    Wood Mackenzie    Oil Prices: North American Oil Plays – Breakeven Analysis, October 2014    (2014)

Wood Mackenzie, 2015a    Wood Mackenzie    Bakken/Three Forks Key Play Report, June 2015    (2015)

Wood Mackenzie, 2015b    Wood Mackenzie    North America Supply Chain Analysis Tool, June 2015    (2015)

Wood Mackenzie, 2016a    Wood Mackenzie    Revisiting Re-fracturing: Still As Attractive as It Was in 2015? May 2016    (2016)

Wood Mackenzie, 2016b    Wood Mackenzie    Bakken/Three Forks Key Play Report, August 2016    (2016)

Wood Mackenzie, 2016c    Wood Mackenzie    Midland Wolfcamp Key Play Report, August 2016    (2016)

Wood Mackenzie, 2017    Wood Mackenzie    Petroleum Fiscal Systems: 2016 in Review, January 2017    (2017)


Authors: R.L. Kleinberga, S.Paltsevb,C.K.E.Ebingerc,D.A.Hobbsd, T. Boersmae

aSchlumberger-Doll Research, One Hampshire Street, Cambridge, MA 02139, United States. bJoint Program on Science and Policy of Global Change, Massachusetts Institute of Technology, Cambridge, MA 02139, United States. cAtlantic Council, 1030 15th Street NW, Washington, DC 20005, United States. dKing Abdullah Petroleum Studies and Research Center, Airport Road, Riyadh 11672, Saudi Arabia. eCenter on Global Energy Policy, School of International and Public Affairs, Columbia University, 420 West 118th Street, New York, NY 10027, United States

Corresponding author.

E-mail addresses:

[email protected] (R.L. Kleinberg),

[email protected] (S. Paltsev),

[email protected] (C.K.E. Ebinger),

[email protected] (D.A. Hobbs),

[email protected] (T. Boersma).

© 2017 The Authors. This is an open access article under the CC BY license (

Emanuel Martin
Emanuel Martin is a Petroleum Engineer graduate from the Faculty of Engineering and a musician educate in the Arts Faculty at National University of Cuyo. In an independent way he’s researching about shale gas & tight oil and building this website to spread the scientist knowledge of the shale industry.

Leave a Reply

5 × 5 =