By Liz Hampton and Sabrina Valle
Nov 3 (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.
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.
(For a chart on how private firms led rig increases: https://graphics.reuters.com/US-OIL/OPEC/myvmngdzwpr/)
Hess Corp plans to increase its shale output by up
to 8% this quarter over last after adding a rig in North
Dakota's Bakken shale field.
U.S. oil production overall will rise 200,000 bpd through
the end of this year, estimated Reid I'Anson, a senior commodity
analyst at consultancy Kpler. That rate, however, is below the
pace that companies added output during periods of high prices.
The return of drilling and spending by the biggest oil
companies is being closely monitored, particularly as the
Organization of the Petroleum Exporting Countries and allies
meet Thursday to review supply additions. The producer group is
expected to continue its 400,000 bpd monthly increase, as Europe
grapples with energy shortages and soaring prices.
(For a chart on oil prices compared with rig and production
over time, click here: https://graphics.reuters.com/USA-OIL/lbvgnoqabpq/)
Not all U.S. producers say they will move output higher.
Permian producer Diamondback Energy on Tuesday vowed to
keep production flat next year, and let OPEC complete its
monthly schedule. The company twice lowered its capital spending
budget this year, a 10% decline since April.
"The industry has tried a market share war with OPEC before
and it didn't work out," Diamondback Chief Financial Officer
Kaes Van't Hof said.
(Reporting by Liz Hampton in Denver and Sabrina Valle in
Houston; additional reporting by Stephanie Kelly in New York
Editing by Marguerita Choy)
BP (BP.)