Shale drilling has become a lot cheaper over the past three years, with new drilling techniques, efficiency gains and learning-by-doing helping to lower breakeven costs. The IEA says that U.S. shale has achieved cost reductions on the order of 30 percent in 2015 and another 22 percent in 2016, although individual shale basins have seen much larger cost declines. Still, some of the “efficiency gains” could be temporary, as I have discussed in previous articles. As drilling picks up, the supply of oilfield services and equipment will tighten, putting upward pressure on the cost of contractors for oil producers. Rystad Energy sees cost inflation of about 10 to 15 percent this year. There are more signs of this phenomenon playing out. Bloomberg reports that some Permian oil producers are having trouble hiring workers, even when their job listings advertise an enticing salary of $80,000 per year for truckers. “It’s […]