U.S. Energy Secretary: Shale Could Boost Production Even at $50 Oil | OilPrice.com
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Breaking News:
U.S. shale producers could increase production even if oil prices fell to $50 per barrel as the sector continues to innovate and boost efficiency gains, U.S. Secretary of Energy Chris Wright told the Financial Times.
The shale industry can sustain a lower price of oil, according to Wright, a former boss at fracking firm Liberty Energy.
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“New supply is going to drive prices down. Companies are going to innovate, drive their prices down and consumers and suppliers will bounce back and forth,” Wright told FT.
The energy secretary appears much more optimistic about the U.S. shale sector’s resilience than many analysts and even the U.S. oil producers themselves.
U.S. firms, especially the large public listed companies, signaled as early as President Donald Trump was elected in November that there wouldn’t be a “drill, baby, drill” boom in the shale patch despite the eased regulations under the new administration.
President Trump has promised to slash energy costs for Americans and has repeatedly called on OPEC+ and Saudi Arabia to “reduce the price of oil”. But he has also vowed a new wave of “drill, baby, drill” in the U.S. energy industry.
President Trump signed on his first day in office an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by President Biden.
While the industry applauded the pivot to helping America make greater use of its oil and gas resources, companies are not rushing to dig themselves into another production boost.
The key reason for this is that the nature of the shale business has changed as producers look to return more money to shareholders while the wave of mergers and acquisitions has led to bigger producers becoming even bigger by absorbing smaller ones. Large public companies are not inclined to sink capital in relentless drilling—they prioritize returns to investors.
“We’re not going to see anybody in ‘drill, baby, drill’ mode,” ExxonMobil Upstream President Liam Mallon said in November.
By Tsvetana Paraskova for Oilprice.com
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