The drilling of shale oil has been hailed as revolution that has brought cheap gas and oil to American and made America a net exporter of oil and natural gas. However, there is serious debate as to whether shale is a sustainable business model given the high number of bankruptcies in the sector.
Shale oil and natural gas are extremely capital intensive, and buying land, drilling and extracting the oil is far more expensive than drillers will admit to. Proof of this is that we have seen hundreds of shale oil companies go bust and almost no shale oil companies produce any free cash flow.
Shale oil companies have gone bust, many repeatedly
Hundreds of defaults and billions of dollars of defaulted bonds show that the shale oil business model was not sustainable.
Shale oil destroys the landscape and leaves a large pockmarked surface polluted by chemicals. The long run environmental problems of shale make it a poor business model, as communities are left to pick up the pieces.
The ability for drillers to learn quickly and improve production has brougth down shale's true cost of extraction far below the market price of oil
This page was last edited on Thursday, 27 Feb 2020 at 12:26 UTC