The US shale bosses: “Europe should not expect salvation”

The US shale bosses: “Europe should not expect salvation”
The US shale bosses: “Europe should not expect salvation”

The US shale sector has warned it cannot save the Old Continent by increasing crude and gas supplies in time to avert a winter energy spasm amid fears a collapse in Russian exports will send oil prices back above $100 a barrel. the black gold.

Although tensions in oil markets have eased in recent weeks, the respite may end when the European Union’s blanket ban on Russian sales comes into effect by the end of the year. US Treasury Secretary Janet Yellen warned this week that the embargo “could cause a spike in oil prices”. U.S. producers, which have huge reserves of black gold and natural gas that could serve as alternative sources of supply to Europe and stave off winter energy shortages, have reported that they cannot ramp up production fast enough. And while some companies are pumping harder, the total number of wells in operation has remained flat in recent weeks and production per unit of site has fallen.

Will Van Lowe, head of private equity group Quantum Energy Partners, which is one of the largest investors in the US shale sector, warned that “there is no bailout coming”, “not on the oil side, not on the gas side “.

U.S. crude and blue fuel exports are picking up to take advantage of higher prices in Europe, but are already near their maximum, company executives said, warning that crude output will be lower by about 1 million barrels per day from government forecasts. Asked about the prospect of more production increases, Scott Sheffield, CEO of Pioneer Natural Resources, one of America’s largest producers, said he “doesn’t see that coming” because “nobody has develops new wells”. Sheffield even believes that black gold prices could exceed $120. dollars per barrel in the winter when supplies dry up.

The International Energy Agency announced on September 14 that sales of black gold from Russia, the world’s largest exporter of the commodity, could fall by almost 20% when the EU embargo takes full effect. Brent crude rose 1% to $94 a barrel after the news and was hovering around $93 a barrel in the afternoon on September 15.

A boom in shale production over the past decade has made the United States the world’s largest producer of black gold, with pre-pandemic production of the commodity reaching 13 million barrels per day, or more than 10% of global supply. Annual production growth during the boom years satisfied more intensive consumption and thus kept prices under control. During the pandemic, activity dried up, prices sank to single digits, and only last week did production recover to 12.1 million barrels per day.

In addition to weaker shale supply growth, concerns about OPEC’s ability to increase production have also emerged. Last week, the cartel announced plans to begin cutting production. And while the giants Chevron and ExxonMobil, as well as some private companies, pump more actively, the total number of wells in operation remains unchanged, and productivity falls.

Private equity firm Kimmeridge Energy CEO Ben Dell said Wall Street shale investors won’t give their blessing for big production growth and prefer the model of lower output with higher profits because ” capital stock is severely limited”.

A modest increase in production in the US in the coming months will not significantly change things, believes Matt Gallagher – head of the private producer “Greenlake Energy Ventures”. He adds that “it would be dangerous to think that the production of cheap energy, especially from the oil industry, can grow forever.”

Washington has been struggling for months to bring down oil and gasoline prices, which have soared to record highs since Russia’s invasion of Ukraine and deeply unsettled President Joe Biden’s administration ahead of November’s midterm elections. The White House has asked shale producers to increase output, and Energy Secretary Jennifer Garholm likened the situation in the country to “preparation for war”. Ms. Yellen, meanwhile, said the White House was working with its G7 partners to reach potential exemptions from the Russian embargo to avoid a supply shock.

The article is in bulgaria

Tags: shale bosses Europe expect salvation