US oil chiefs sounded off this week against Washington policies that they say are holding back the industry, but few showed any interest in boosting crude output as WTI crude prices flirt with $100/bl for the first time this year.
Regulatory whiplash, the pressing need for faster permitting and cancelled lease sales all had attendees hot under the collar at the inaugural American Energy Security Summit in Oklahoma City organised by shale billionaire — and one-time confidant to former president Donald Trump — Harold Hamm. He compared changes in energy policy from one administration to the next as akin to "riding a roller coaster".
The US is less dependent on energy imports than during the Trump administration. Oil production is on track to hit a record high of 12.8mn b/d this year, according to the EIA, and the US has increased net oil exports in each year of President Joe Biden's term.
Chevron chief executive Mike Wirth noted that some in the industry talk about US oil output being back at record levels. "With better policy, we would be beyond that," he said. Republican presidential contender Nikki Haley vowed to kick-start domestic production by speeding up approval times for oil projects and pipelines, after accusing the Biden administration of "crushing producers under an avalanche of mandates".
The topic of US energy dominance and its role in bolstering national security came up again and again at the summit. "Our politicians can't lose sight of the fact that unless we're energy independent, we do not control our own destiny," Occidental Petroleum chief executive Vikki Hollub said.
But there was little appetite to ramp up crude production in response to prices that are on a roll as a result of extended production cuts by Saudi Arabia and Russia and signs of robust demand. Just a few years ago, the shale sector's runaway growth and profligate spending ended up helping to crash the market, leaving shareholders nursing heavy losses.
"We've learned our lesson, I'm convinced, and so we're going to keep production relatively flat," Devon Energy chief executive Rick Muncrief told Argus. Although higher oil prices might boost cash flow in the short term, there are also doubts about the sustainability of the current rally. "It's a very backwardated curve — maybe $90 this week or $100 — but what the curve is telling you is that 12 months out, it's $80, or $75 two years out," Muncrief said. "That's what prevents companies from deciding that it's time to start growing again."
Oil executives might also have good reason not to want to see prices go that much higher. Biden last year threatened a windfall tax on oil company profits after the industry showered shareholders with cash rather than heed his call to ramp up output to help bring down sky-high gasoline costs.
Transitions take time
While financial institutions have come under intense pressure from environmental groups in recent years to stop lending to fossil fuel companies, the tide could be turning. "We recognise that there needs to be a transition over time, but that transition is going to take time," bank Goldman Sachs chief executive David Solomon said at the summit. "We're all going to continue to finance traditional companies for a long time." Energy security concerns highlighted by the fallout of Russia's invasion of Ukraine mean that there is now a better chance of having a "more rational, honest conversation" than just a few years ago, he added.
But "this administration won't even admit that we exist," Hamm railed in an interview with Argus. "And in fact, wants to put us totally out of business."
