Cost

In the story “Michigan Backs DTE Electric Contract With Nexus, But Denies Cost Recovery Plans,” NGI incorrectly reported that the utility’s cost-recovery plans were denied when, in fact, the decision was deferred.

Oil and natural gas industry costs have improved sharply since late 2014, but overall supply costs remain high, suggesting that it’s going to take stronger commodity prices to sustain global operations, BMO Capital Markets analysts said in a new report.

Weatherford International plc has undergone a significant cost restructuring during the downturn, including a 42% reduction in its workforce over the past 18 months, management told investors during the company’s quarterly conference call Thursday.

The oil and gas industry is adapting to sustained lower commodity prices, all to the good in the U.S. onshore, where the tight oil plays have become commercially viable at an oil price of under $60/bbl, Wood Mackenzie research has found.

Capital efficiencies for many North American producers should strengthen on the back of higher natural gas and oil prices than in 2015, but cost “reflation” has begun to reappear, according to analysts.

On Tuesday FERC granted a hearing for an ANR Pipeline Co. rate case reflecting “a substantial increase” in the pipeline’s cost of service. The Commission also will consider a “preferred case,” proposed by ANR, which would cut its rate structure from seven to four zones. Judging by filings in the docket so far, there will be plenty to talk about.

After falling 30% between 2014 and 2015 as oil prices plunged, the marginal cost to produce a barrel of oil could fall again in 2016, but operators overall still need higher commodity prices to breakeven, according to an analysis by Sanford C. Bernstein & Co. of the Top 50 global operators.

Denver-based DCP Midstream LLC, the largest natural gas processor in the country, has reduced its workforce by 10% and slashed capital spending for 2016.

Hydraulic fracturing coupled with horizontal drilling proved to be a game changer for the oil and natural gas industry, and today, operators are harnessing digital technologies that are improving their prospects even more.