The collapse of oil has forced the energy industry to delay $1 trillion in projects aimed at pumping crude and searching for oil through the end of the decade, leaving 7 billion barrels of crude in the earth, FuelFix.com reports.
And though crude prices have risen above $45 a barrel, the industry is expected to continue dropping big projects as oil companies run out of cash, energy research firm Wood Mackenzie says in a report Wednesday.
“Virtually every oil producing country has seen some form of capex cuts,” says Malcolm Dickson, principal analyst at Wood Mackenzie, in a statement. “The deepest are in the U.S. Lower 48, where forecast capital investment has halved,” falling by $125 billion over 2016 and 2017.
Analysts say U.S. companies have cut spending deeper than they did in the 1980s oil bust, which devastated the Texas economy. But the shale industry’s cuts have affected areas in North Dakota, South Texas and other remote regions the most. The once-booming shale plays account for 70% of the oil production expected to be lost in the cuts that are reducing global output by 3% this year and an estimated 4% next year.
The industry has scrapped projects on another frontier, as well. Spending on expensive deep-water production and ultra-deep projects, which are drilled in more than 7,000 feet of water, is projected to fall 40% over the next two years.
