Powder River Basin Nears $50 Per Barrel Oil Production
One of the main challenges for oil and gas in the Powder River Basin has been the cost to produce a barrel of oil. However, the implementation of longer laterals has begun to lower these costs.
The oil and gas industry in the Powder River Basin is approaching a critical milestone: producing oil at under $50 per barrel consistently. This price point is crucial as it allows the basin to compete with other major shale plays across the U.S. Reaching this threshold is important for attracting new investment and infrastructure development, which in turn improves efficiency and unlocks more potential.
Current Cost Trends and Break-Even Analysis
Historically, the average break-even cost in the Mowry and Niobrara formations ranged from $60 to $65 per barrel. However, longer laterals of about three miles are driving this cost down to roughly $55 per barrel according to an analysis by Enverus, a leading industry data firm.
“What is still most relevant to the market is sub $50,” said Enverus analyst Ryan Hill. “But we do think there are ways to get there, and there are certain operators who are already achieving sub $50 per barrel break even.”
Leading Operators in the Push for Lower Costs
Devon Energy is at the forefront, having drilled the first three-mile lateral in the Powder River Basin. Devon has drilled 38 of these longer laterals so far. Continental Resources follows closely with 33 such wells, both contributing significantly to the cost reductions.
Outlook
Reaching consistent production costs below $50 per barrel would mark a turning point for the Powder River Basin, unlocking new growth potential and attracting more capital to this underutilized play.
Summary: Efforts to lower production costs via longer laterals are bringing Powder River Basin oil closer to the competitive $50 per barrel mark, potentially unlocking significant new development opportunities.
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