Crude oil project cutbacks
The steep decline in oil prices over 2015 and the “new reality” of low prices for a longer period of time have led to the deferral of many high-cost projects (see Figure 3). Based on research of public data and news releases, non-OPEC cancellations and postponements are expected to include 1.3 million b/d of production over the next five years. A sizable portion (nearly 1 million b/d) of these is related to high-cost Canadian oil sands projects that are not too late to be stopped.
An additional uncertainty regarding future production volumes is related to stripper well production. Sustained low crude prices are likely to impact US stripper wells if prices continue to fall. According to the National Stripper Well Association, there are over 400,000 stripper wells in the US accounting for an estimated 1 million b/d of production. These wells require crude prices in the low $30s /bbl in order to cover operating costs for these low volume wells