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U.S. oil producers are unable to increase supply to rising crude oil prices that “remain under Opec control,” according to the shale’s largest operator.
Brent crude rose to a price three years higher $ 80 per barrel last week the fear of a deepening global energy crisis that has already pushed gas and coal prices in Europe and Asia to a record high.
But Scott Sheffield, CEO of Pioneer Natural Resources in Texas, said America’s once fertile shale producers would continue to use their growing cash stacks to pay shareholders, not to fund new drilling.
“Everyone is going to be disciplined, whether it’s $ 75 Brent, $ 80 Brent or $ 100 Brent,” Sheffield said. “All the shareholders I spoke to said that if anyone goes back to growth, they will punishment.”
“I don’t think the world can rely much on American shale,” he said. “It’s really under Opec control.”
Pioneer bought two rival Texas producers, making it the largest single oil producer in the Perm Basin, with a yield of nearly 360,000 barrels per day – more than in some of the smaller member states of the Opec oil cartel. He said the production increase would be 5% next year, well below double-digit rates of previous years.
The remarks of the Pioneer chief come as the US government puts pressure on Saudi Arabia, the de facto leader of Opec, to increase the crude supply to keep further energy price inflation in check.
The expanded Opec + alliance, which also includes allies such as Russia, will meet on Monday to decide whether to meet the output targets.
The group last year agreed on deep production cuts to repair crude prices that fell when pandemic shutdowns hit energy consumption.
But supply is now too short as economies recover, according to Goldman Sachs, as global crude stocks shrink at a record pace. Last week, the bank raised its Brent forecast at the end of the year from $ 80 to $ 90 a barrel. Brent rose to $ 79.28 on Friday.
Some analysts say the gas crunch hitting Europe and Asia could flush markets with liquid fuels, which could increase demand for crude oil this winter as industries burn more oil to generate electricity.
Opec + agreed in July to add 400,000 b / d every month until the end of 2022, but some analysts say stocks need to rise faster to stem further price inflation.
U.S. Security Adviser Jake Sullivan last week discussed oil prices with Saudi Arabia’s Crown Prince Mohammed bin Salman, according to the White House.
Sheffield said that while the Biden administration called on Opec to increase inventory, it tried to slow down U.S. drilling in any way through moves, such as a moratorium on leasing federal land for drilling .
“They would rather import crude oil from Opec,” he said.
The rising production of shale in the last decade has made the US the world’s largest crude producer, pumping nearly 13 million barrels a day at the end of 2019.
But years of debt drilling have exhausted some fields, say operators, and evil investorswhich left the sector vulnerable when the pandemic struck in 2020. The price drop forced producers to reduce capital expenditure and idle equipment.
Drilling activity has begun to increase — which has led some analysts to predict a modest increase in production — but production remains nearly 15 percent below the pre-pandemic peak.
Sheffield said the deal in the Perm would also ease producers’ reaction to rising prices.
“There are only four or five businesses with core (area),” and Shale will never again reach annual growth of about 1.5mb / d in previous years, he said.
“Maybe a million on top of that for a few years,” Sheffield said.