ML-Implode News - Deepwater Drilling's Cost-Fall Flummoxes OPEC

Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie Ltd. That meansÂ oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates.
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The tumbling costs present another challenge for the Organization of Petroleum Exporting Countries, which is currently curbing output to shrink a glut. In 2014, when the U.S. shale boom sparked oil's crash from above $100 a barrel, the group embarked on a different strategy of pumping at will to defend market share and throttle high-cost projects. Ali Al-Naimi, the former energy minister of OPEC member Saudi Arabia, said in February 2016 that such producers need to either "lower costs, borrow cash or liquidate."
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Warnings from OPEC of a looming shortage are "overstated and misleading," Citigroup Inc. said in a report earlier this month. The revolution in unconventional supplies like shale is "unstoppable" unless prices fall below $40 a barrel, and deep-water output could grow by more than 1 million barrels a day by 2022, according to the bank.

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Deepwater Drilling's Cost-Fall Flummoxes OPEC