That's an interesting article, thanks. I find it quite funny how...

That's an interesting article, thanks.

I find it quite funny how all the resource / energy executives produce these fancy "cost curve" graphs, which they typically use to justify a certain commodity's floor price by saying "well, here's how much this commodity costs to extract, so there's no way we can go below the marginal cost of extraction." I remember 4-5 years ago iron ore companies were saying there's no way iron ore could go below something like $100 per ton, because that's where the marginal cost was on their fancy cost curve - an example of this thinking is here: http://www.breakawaydigger.com/articles/iron-ore-keeping-things-in-perspective. Of course, then the big price correction comes and the price falls well below the "floor price" established by the cost curve, and what magically happens is that producers frantically scramble to become more efficient (and they're usually quite successful). And, hey presto, the cost curve after a big downturn looks completely different (i.e. lower marginal cost) to what it did prior to the downturn.

This is exactly what is playing out in deep sea oil right now - the 'marginal cost' to extract is coming down significantly because companies are being forced by the low oil price to be much more efficient than they were 3 years ago when oil was $100 per barrel.