The slowdown in the Permian production growth is likely to be just temporary, and the U.S. shale boom is unlikely to end soon, the new U.S. Secretary of Energy, Dan Brouillette, told Bloomberg in an interview on Tuesday.
U.S. oil production will continue to grow, despite the slowdown which is already evident across the shale patch, Brouillette said.
Shale producers now can adapt to oil price volatility much better than in the past, thanks to technological improvements in drilling, said Brouillette, who was sworn in last week to replace Rick Perry as energy secretary.
“The recent events in Saudi Arabia, the recent events with OPEC — none of those had any sort of dramatic or extraordinary move of the market associated with them,” Brouillette told Bloomberg, noting that the U.S. crude oil production levels—the world’s largest—prevent prices from extreme volatility.
According to the new energy secretary, oil price shocks are now less extreme than in the past, and OPEC has lost part of its clout as the oil price maker.
OPEC “just doesn’t matter in the same way that it did a generation ago,”
Brouillette told Bloomberg.
Thanks to the shale boom, the United States exported more crude oil and petroleum products than it imported in September 2019—the first month in which America was a net petroleum exporter since monthly records began in 1973, the U.S. Energy Information Administration (EIA) said earlier this month.
However, in recent weeks, many U.S. oil and gas firms have cut capital expenditure plans and production targets for 2020, squeezed between the scarce availability of capital from debt and equity markets and investors demanding returns.
Capital discipline, combined with firms having to move to Tier 2 and 3 locations to drill and having to deal with parent-child well issues, has the U.S. shale patch saying that current forecasts about U.S. production growth are too optimistic and not taking into account many of those issues.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com: