Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Exxon CEO doesn’t see supply shortage pushing up oil prices

Exxon Mobil news
Exxon Mobil news

The world’s largest publicly listed oil company says ample production from U.S. shale regions will keep prices subdued for years to come, disagreeing with others in the industry who have warned about a looming shortage.

Rex Tillerson, chief executive officer at Exxon Mobil Corp., presented an upbeat view of how technology will allow companies to pump more, preventing a price “blow out” in the future. Falling costs in America’s shale fields will counteract OPEC’s renewed commitment to supply management and the long-term effect of underinvestment in exploration.

“I don’t necessarily have the view that we are setting ourselves up for some big collapse in supply within the next three, four, five years,” he told executives and officials at the annual Oil & Money conference in London.

Tillerson, who has worked at Exxon for more than four decades, put himself at odds with officials including Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih and rivals such as Patrick Pouyanne, the head of French oil giant Total SA. The Organization of Petroleum Exporting Countries and the International Energy Agency have also warned that the market could face a supply crunch after the industry cut spending to the bone to weather a prolonged downturn.

To read about OPEC’s gift to the oil majors, click here.

In its World Energy Investment report last month, the IEA said that oil companies have cut investment in new production by 24 percent this year, following a 25 percent reduction in 2015 due to low oil prices. Next year they could cut spending for an unprecedented third year in a row, the Paris-based agency warned.

Reassure Consumers

Exxon’s upbeat view may be reassuring for consumers, but it presents problems for the company. Exxon excels at huge, capital-intensive and technically challenging projects that make sense when oil prices are significantly higher than $60 a barrel. Like other behemoths, unless it can cut costs further, Exxon could see itself squeezed by nimbler U.S. shale producers.

Cheaper, faster fracking means tight oil remains viable, even at a relatively low price, Tillerson said. Large swathes of U.S. shale become economical at $60 a barrel as costs fall and productivity increases, he said.

Other speakers at the conference echoed his views. ConocoPhillips CEO Ryan Lance estimates that new wells are viable in the Permian, Eagle Ford and Bakken shale basins at just $40 a barrel, he said Tuesday. Production in the Permian can grow by 300,000 barrels a day for the next 10 years “easy,” said Scott Sheffield, chief executive officer of Pioneer Natural Resources Co., which is adding five drill rigs in the basin.

“It’s difficult to see a big supply precipice out there,” Tillerson said. “It’s difficult to see a big price blowout.”

Bankruptcy Fears

Despite persistent fears of bankruptcies in the U.S. oil patch as banks cut lending to the energy industry, Tillerson said the current boom-and-bust cycle has “confirmed the viability of a very large resource base in North America,” adding that shale would serve as “enormous spare capacity” to meet future demand.

The comments are likely to reinforce the emerging view at the Oil & Money conference, which every year gathers some of the leading industry voices, that oil prices will remain at around $50 to $60 a barrel for the next few years.

Recommended for you

More from Energy Voice

Latest Posts