By: Liz Hampton, and Sabrina Valle – Reuters – U.S. shale producers’ decision this year to resist pumping more oil even as prices surge could be nearing an end, according to company executives.
Several major oil companies, including BP Plc, Chevron Corp and Exxon Mobil Corp, are planning to increase output or shale spending next year, undercutting OPEC’s tight supply management that has pushed crude oil prices above $80 a barrel as global demand for fuel rebounded more swiftly than many anticipated.
“As oil prices rise, it’s increasingly likely that oil production growth resumes,” said Josh Young, chief investment officer of energy investor Bison Interests. The gains, however, will remain below the rate of pre-COVID-19 increases, he said.
Overall U.S. crude production rose last week to 11.5 million barrels per day, according to latest U.S. Energy Department figures, inching closer to its peak of about 13 million bpd before the coronavirus pandemic hit last year. More than 70% of U.S. output comes from shale production. [EIA/S]
The planning uptick in shale will come from larger companies and particularly from the Permian Basin, the top U.S. shale field. The change follows pressure from the White House for more production as retail fuel prices rise.
Permian output is forecast to hit 4.89 million bpd in November, just below the peak 4.91 million bpd of March 2020 before the pandemic hit. The remaining shale regions, however, have lagged, producing a quarter less oil than at their peak in early 2020.
On Tuesday, BP said it would increase spending on its U.S. shale holdings next year by $500 million. Exxon last quarter grew shale output by 30% to about 500,000 bpd and could add two more drilling rigs ahead, its chief executive said last week. Chevron this quarter will add two rigs and well-completion crews, adding to output in early 2021.