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Analysis of Economic Determinants of Shale Oil Production Success in the USA
Sergey Yuryevich Kovalev
Over the past decade the world oil market has undergone a significant transformation caused by an unexpected increase in the production of shale oil in the United States. The combination of horizontal drilling and hydraulic fracturing developed in the 1970s and high oil prices made it possible to produce large amounts of shale oil. The increase in supply in the world market of crude oil and decline in demand resulted in a two-fold decline in oil prices. The fall in oil prices below $ 50 per barrel in 2016 was considered as the end on shale boom. But the combination of continuously improving technologies of shale oil extraction and the flexibility of projects have confirmed the consistency of the term "shale revolution". Characteristics of shale projects required application of stochastic models of real options, which were used as theoretical foundations in the calculation of prices.