July 2015, Vol. 242, No. 7

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Not Deterred By Huge Risks, Shell Opts For Megaprojects

U.S. shale has offered the oil industry a business model that is different from conventional drilling of the past. High initial decline rates, especially compared to conventional wells, requires companies to continuously drill to keep up production. But with lower upfront costs and shorter ramp up times, shale drilling is arguably less risky than a multibillion-dollar megaproject that the oil majors had become accustomed to over the past decade. And in a period in which prices are relatively weak, shale could allow exploration companies to increase drilling or throttle back depending on market conditions, providing a degree of flexibility over conventional drilling that often has longer l

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