Instead of urging OPEC+ to supply more oil, President Biden should back off American drillers, the chief executive of Pioneer Natural Resources told Bloomberg in an interview.
The Biden administration's measure to limit oil and gas drilling on federal lands has started to backfire, Scott Sheffield said, adding that the president has "got to back off his rhetoric on federal leases going forward."
President Biden's repeated pleas and later demands that OPEC boost production and rein in U.S. retail fuel prices has caused understandable chagrin among U.S. oil companies, especially after it failed to produce a response from OPEC and its partners, which met yesterday only to announce they would stick to adding 400,000 bpd to their combined production.
Yet, according to Sheffield, the Biden administration's oil and gas agenda is not the only reason stopping U.S. oil drillers from boosting production. Shareholder priorities are a much bigger one.
"Investors do not want us to grow anymore," Sheffield told Bloomberg. "If we start growing too much again we'll see a price collapse. It's happened too many times over the last 11 years. I just don't see any extra supply coming on over the next several years."
Some of these companies are reducing their presence in the Permian—America's most prolific shale play—to satisfy shareholder expectations. The acreage is being snapped up by smaller private players, Reuters reported this week.
"It's still the best-producing onshore field in North America," Mike Blankenship, a managing partner at law firm Winston and Strawn, told Reuters. "I think it still has a long, bright future ahead."
According to Citi's head of commodity research Ed Morse, the Permian is already back to pre-pandemic levels of production and about to build on that next year.
As for a potential wider boost in U.S. oil production, according to Sheffield, this would necessitate President Biden changing energy investors' minds about their priorities.
By Irina Slav for Oilprice.com
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