U.S. oil producer ConocoPhillips sees global demand returning to 100 million bbl/d and growing from there, with oil an “important part of the energy mix in any scenario” going forward, a senior executive said Sept. 24.
The view stands in contrast to that of rival BP Plc, which sees the coronavirus pandemic leaving a lasting effect on global energy demand, though ConocoPhillips still expects “quite a bit of uncertainty next year,” Senior Vice President Dominic Macklon said during a Q&A with Raymond James.
The company’s capital spending in 2021 will be “somewhat below” its original planned 2020 level of $6.6 billion, Macklon said.
The hardest-hit area of the oil industry in 2020 has been U.S. shale, where producers cut production and sidelined equipment as oil prices crashed. While shale output was about 8.2 million bbl/d at the start of the year, that level will likely fall by 4 million bbl/d in 2022, Macklon said.
ConocoPhillips left seven drilling rigs at work in shale fields, but cut all fracking crews earlier this year as oil prices crashed. It is returning two fracking crews to work, Macklon said.
Some shale producers are stockpiling federal drilling permits ahead of the Nov. 3 U.S. presidential election as a hedge against possible rule changes under a Democratic administration. Just 20% of ConocoPhillips’ Permian Basin acreage is on federal land in New Mexico, while the company expects to receive permits within a month for its Willow project along Alaska’s North Slope, “in which case we wouldn’t be exposed” to changes, Macklon said.
In July, ConocoPhillips agreed to buy land from Kelt Exploration Ltd. in Canada’s Montney shale oil play, in a $375 million deal. The 140,000 acres in British Columbia are adjacent to ConocoPhillips’ own Montney lands.
Asked whether it would consider a purchase in an area where it does not already operate, Macklon said yes, but the preference is for assets “we know and understand well.”
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