(Bloomberg) — Occidental Petroleum Corp. warned that US energy independence is susceptible to slipping away if shale output plateaus and begins to say no.
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“It’s going to begin to roll over, and when that happens, that’s when the US is in danger for losing our energy independence,” Chief Executive Officer Vicki Hollub said in a presentation at Hart Energy’s Executive Oil Conference in Midland, Texas, on Thursday. “That might are available the subsequent five years that we begin to see that plateauing occur.”
The US is pumping greater than 13 million barrels a day, exceeding every other nation and up almost 45% in only a decade. The worldwide oil market is closely watching to see if American explorers can drill enough recent wells to offset the natural decline in aging shale discoveries.
Holllub said President-elect Donald Trump understands the business case for using carbon dioxide to scrape more crude from the underside of oilfields, a method often known as enhanced oil recovery that Occidental has employed for years.
“He understands that for those who lose your whole energy independence, geopolitically we can be weaker in that type of scenario than we’re today,” Hollub said. “What he wants is he wants us to get essentially the most out of the reservoirs that we have now here within the US.”
In the center of the Permian Basin, bankers and other executives discussed the longer term of the world’s busiest shale patch, which currently produces about 6 million barrels a day.
Permian crude output “will peak at barely above 7 million barrels a day at the top of this decade,” said Pete Bowden, global head of business, energy and infrastructure investment banking at Jefferies Financial Group Inc. “But thereafter will decline more regularly than most experts expect.”
There’s anywhere from 10 to 25 years of drilling inventory left within the Permian’s Delaware sub-basin, in response to a presentation from ConocoPhillips, citing data from industry consultant Enverus. Within the Midland sub-basin that has been producing oil for greater than a century, the drilling inventory is seen within the range of eight to fifteen years.
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