With benchmark Brent crude priced at US$70 per barrel in mid-December, investment bankers Goldman Sachs identified $930 billion in Arctic oil, deepwater drilling, and tar sands/oil sands projects that were no longer profitable, but still in operation.
By the time Bloomberg reported on Goldman’s study of 400 new oil and gas fields, prices had dipped below US$60 per barrel, putting even more development activity underwater. (As of 11:55 GMT today, Brent crude had fallen to $54.90 per barrel.)
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“There are zombies in the oil fields,” Randall writes. “After crude prices dropped 49% in six months, oil projects planned for next year are the undead—still standing upright, but with little hope of a productive future.”
Low prices could lead investors to pull $150 billion out of oil and gas this year, but “these glut-driven prices can’t stay low forever,” he adds. “This is how the boom-bust-boom of the oil market goes: prices fall, then production follows, pushing prices higher again. The longer this standoff goes, the more zombies will languish and the sharper the rebounding price spike may be.”
