Don’t expect US shale producers to bail out Europe by increasing oil and gas exports this winter, industry experts have warned.
Although the US has vast reserves of energy resources, the sector’s exports of oil and liquefied natural gas are nearing a peak, they told the Financial Times.
“It’s not like the US can pump a lot more. Our production is what it is,” Wil VanLoh of Quantum Energy Partners told the FT.
“No bailout is coming. Not on the oil side, not on the gas side,” said the head of the private equity group, a major shale investor.
Concerns about energy supplies have grown since Russia invaded Ukraine in late February, as Western allies imposed energy sanctions and Moscow retaliated by cutting off key gas flows.
Facing a seasonal surge in demand in winter, Europe is racing to find alternatives to Russian energy imports, both gas and oil.
But OPEC has warned that it cannot increase its oil production. Meanwhile, oil companies have underinvested in future production and the U.S. rig count has begun to decline again, according to JPMorgan energy strategist Christian Malek.
This means trouble with future supplies. Asked by the FT if he saw any chance of a big increase in output from US shale producers, one industry chief was taken aback.
“No, I don’t see it coming,” said Scott Sheffield, CEO of shale producer Pioneer Natural Resources.
The supply squeeze has put upward pressure on oil and natural gas prices, and Malek said it could push oil prices as high as $150 a barrel. Treasury Secretary Janet Yellen also said oil prices could rise once Europe’s ban on imports of Russian oil by sea comes into effect later this year.
The prospect of higher market prices for oil and gas is unlikely to lead to output pressure from US shale producers. The industry’s Wall Street investors prefer a low-production, high-profit approach, the FT reported.
The Biden administration has called on U.S. shale producers to increase production, but the industry has said it cannot quickly increase production overnight.
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