ConocoPhillips said it’s capable of supplying US oil to the global market and reiterated a call to end the nation’s ban on crude exports.
The US shale boom has resulted in a glut of light-sweet crude, as production outpaces demand from refineries, Ryan Lance, chief executive officer of the Houston-based company, said in Kuala Lumpur on Monday.
Removing the ban on overseas sales of US oil would benefit consumers because it would reduce domestic as well as overseas gasoline prices, he said at a conference in the Malaysian capital.
A potential easing of the restriction would pit US explorers such as Conoco against the Organization of Petroleum Exporting Countries, which currently dominates supply to markets such as Asia and Europe.
Saudi Arabia is leading OPEC in a policy of maintaining output to defend market share and force shale producers to curb the highest American output in more than three decades.
“We could be a stable supplier of crude to the global markets,” Lance said. “If you want to reduce the cost of gasoline to U.S. consumers, put oil into the market to stabilize the global price.”
The US will become one of the world’s largest oil exporters if domestic production continues to surge and policy makers lift the four-decade ban that keeps most crude from leaving the country, according to a government-sponsored study.
Lance joins Harold Hamm of Continental Resources Inc. and John Hess of Hess Corp. among drillers calling on the government to lift the ban on crude exports as the nation’s supplies are boosted by output from shale formations such as the Eagle Ford in Texas and Bakken in North Dakota.
Last year, drillers were granted permission to ship abroad lightly processed crude, known as condensate. That’s raised speculation that the government may be considering whether to lift the oil-export ban.
The US pumped 9.37 million barrels a day in the week ended May 8, according to the Energy Information Administration. Output averaged 9.42 million a day in the week to March 20, the fastest pace since at least January 1983.
Oil has rebounded from a six-year low in March as US companies cut the number of active rigs drilling for crude by 58 percent since December. The recovery is now faltering amid speculation that rising prices will encourage production and sustain the supply glut.
“We don’t use a particular price when we think about the future,” Lance said. “We see a gradual rise in prices but we see a lot more volatility. We may see a $100 a barrel world. The fear is that if we see that, we’ll see a $50 on the other end of that quite quickly.”
West Texas Intermediate crude, the U.S. benchmark, traded 83 cents higher at $60.52 a barrel on the New York Mercantile Exchange at 3:13 p.m. Singapore time. Prices are still down more than 40 percent from last year’s peak in June.
Output from prolific tight-rock formations such as Bakken and Eagle Ford will slide 54,227 barrels a day this month, based on EIA estimates. It’ll fall another 86,000 barrels in June to a five-month low of 5.56 million, according to the agency.
US shale production will drop in the second half of 2015, Lance said, when asked to comment on the EIA’s estimates.
The company doesn’t expect a wave of mergers and acquisitions in the oil market anytime soon, Lance said. While oil prices have dropped, valuations of companies are still not cheap, he said.