March 13, 2025 at 02:25AM
The message from the White House around US oil is ‘drill, baby, drill’ but a very different message is coming out of Houston at CERAWeek, which is the annual gathering of the US oil industry.
Three titans of the US oil and gas industry are warning that harder times are ahead as the low-hanging fruit in the US has been picked.
First was Continental Resources founder Harold Hamm, who helped to pioneer fracking and is one of the richest people in the world.
“US oil production is beginning to plateau,” Hamm said.
Next was Occidental Petroleum CEO Vicki Hollub who was said US oil output peaking between 2027 and 2030.
Finally, and most telling was Pioneer CEO Scott Sheffield who sold his company to Exxon in 2023. That highlights a bit of a cliff
that the US is headed towards.
“One of the main reasons that Pioneer sold was…we were running out of
Tier 1 inventory. Everybody is running out of Tier 1 inventory. People
don’t talk about the fact that we are running out of inventory.”
He said his former shale company would running out of Tier 1
inventory by 2028 and Tier 2 by 2032.
This is particularly telling in several ways because shortly before Pioneer was sold, the company was thought to have some of the longest ‘core’ inventory.
That speaks to the exaggerations of shale players regarding inventory. They’ve been used to pump fundraising and valuations. Now that Sheffield has cashed out, we learn the truth.
One of the companies that continues to highlight long asset life in the Permian is Exxon, who is holding the Pioneer bag. Now they may be know something we don’t as the company has highlighted technological advances in oil recovery.
Barring that, I think a peak five years from now is optimistic as we may already be at a peak, especially with WTI at $67.
If that’s the case, then the world will struggle to meet the 104.5 million barrels per day (and growing) needed to supply the world market.
This article was written by Adam Button at www.forexlive.com.
