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Shale Oil Pioneers Say the Boom is Ending

The days of relentless production growth from U.S. shale oil fields are ending, potentially aiding OPEC’s years-long effort to drain a worldwide supply glut, according to industry pioneers Scott Sheffield and Mark Papa. Investor calls for shale producers to shut down rigs and stop burning through cash are being heeded, Pioneer Natural Resources Co. Chief Executive Officer Scott Sheffield said on Tuesday. Across the American shale industry, output growth will slow next year, providing a boost for crude prices through the early 2020s, he said.”I don’t think OPEC has to worry that much more about U.S. shale growth long term,” Sheffield said during a conference call with analysts. He’s “definitely becoming more optimistic that we’re probably at the bottom end of the cycle regarding oil prices.” Talk of a shale slowdown reached a fever pitch this year as investors crushed drillers’ stocks and demanded spending discipline. As if on cue, Occidental Petroleum Corp., Apache Corp., Cimarex Energy Co. and Pioneer all are signaling plans to trim budgets. Mark Papa, who built Enron Corp. castoff EOG Resources Inc. into one of the world’s biggest independent oil explorers and now runs Centennial Resource Development Inc., has been sounding the alarm on shale growth since at least February. In reiterating that warning on Tuesday, he said the slowdown will be more dramatic than he predicted as recently as nine weeks ago. Papa downgraded his 2020 shale growth forecast to 400 kbpd (thousand barrels per day) from the 700 kbpd estimate he discussed in early September. Sheffield sees about 700 kbpd being added next year while the Energy Information Administration predicts that next year’s daily production will expand by 910 kbpd. Even the EIA’s figure is half of 2018’s increase.

Date: 
2019/11/21