Supply Flexibility in the Shale Patch: Evidence from North Dakota

Hilde C. Bjørnland (), Frode Nordvik () and Maximilian Rohrer
Authors registered in the RePEc Author Service: Hilde Christiane Bjørnland ()

No No 2/2017, Working Papers from Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School

Abstract: We analyse if output flexibility in oil production depends on the extraction technology.In particular, we ask to what extent shale oil producers respond to price incentives by changing completion of new wells as well as oil production from completed wells. Using a novel well-level monthly production data set covering more than 15,000 crude oil wells in North Dakota, we find large differences in response between conventional and unconventional (shale) extraction technology: While shale oil wells respond significantly to spot future spreads by changing both well completion and crude oil production, conventional wells do not. Our results indicate that firms using shale oil technology are more flexible in allocating output intertemporally. We interpret such output pattern of shale oil wells to be consistent with the Hotelling theory of optimal extraction.

Keywords: Oil extraction; crude oil prices; US oil shale boom; Hotelling theory (search for similar items in EconPapers)
Pages: 37 pages
Date: 2017-04
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

Downloads: (external link)
https://brage.bibsys.no/xmlui/bitstream/handle/112 ... quence=3&isAllowed=y

Related works:
Journal Article: Supply flexibility in the shale patch: Evidence from North Dakota (2021)
Working Paper: Supply flexibility in the shale patch: Evidence from North Dakota (2019)
Working Paper: Supply Flexibility in the Shale Patch: Evidence from North Dakota (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bny:wpaper:0051

Access Statistics for this paper

More papers in Working Papers from Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School Contact information at EDIRC.
Bibliographic data for series maintained by Helene Olsen ().