U.S. oil production will never again hit the record 13 million barrels per day set earlier this year, just before the pandemic devastated global demand, according to Occidental Petroleum Corp.
“It will be just too difficult to replace the 2 million barrels per day of production that we have lost and then continue to grow beyond that,” CEO Vicki Hollub told the Energy Intelligence forum on Wednesday. “Over the next three to four years, there will be a moderate recovery in production, but not high growth.”
Occidental is one of the largest producers in the U.S. shale industry, which added wells at such a rate before the spread of Covid-19 that the country has become the world’s largest producer of crude, overtaking Saudi Arabia and Russia, ushering in an era in which President Donald Trump called “American energy domination. “
Shale’s debt-fueled expansion came to a halt due to declining gasoline demand and oil prices, but also due to Wall Street’s growing reluctance to fund growth at any cost. . Shale miners increasingly prioritize cash flow and returns for investors over production growth.
Occidental, which rivals Chevron Corp. to be the largest producer in the Permian Basin, was forced to cut capital spending, lower growth targets, and cut its dividend in an effort to save money during the recession. His finances were already badly damaged by the debt incurred during the purchase of 37 billion dollars Anadarko Petroleum Corp. Last year.
Hollub said global consumption is around 94 billion barrels per day and it would take a Covid-19 vaccine before it drops back to 100 million barrels. Due to global cutbacks, oil supply and demand will likely balance out again by the end of 2021, she said.
Unlike some of its European peers, Hollub sees strong long-term demand for oil. “I expect we will reach peak supply before reaching peak demand,” she said.