Oil executives urge Biden to release shale

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The growing chorus of US oil executives for President Joe Biden to throw the weight of the federal government behind an industry he once deliberately avoided: US shale.

The administration, which has made climate one of its policy pillars, has more than once called on OPEC+ to increase crude production to rein in energy prices while refusing to do so at she. Now oil and gas executives say they can help ease the energy crisis sparked by Russia’s invasion of Ukraine, but want help from the White House first.

“This shift away from Russia won’t happen overnight, and we need to be clear about that, but for that to happen, we need a clear and consistent energy policy here in the United States,” said Dustin Meyer, vice president of American Petroleum. Institute, said on a conference call. “Unfortunately, that’s not really what we have right now.”

A pump jack operates as a drill rig on a well pad in the Bakken Formation in Williston, ND (Daniel Acker/Bloomberg)

As critics complain the fossil fuel industry is pressing its wartime advantage, further price hikes triggered by Russia’s invasion of Ukraine could force President Biden to heed the how the growing urgency of energy security aligns with its climate agenda.

“We expect a change in tone from Washington,” Pickering Energy Partners said in a note to clients. The growing crisis in Europe combined with “economy-killing high gasoline prices” are likely to prompt the White House to explicitly call for increased US production, the analysts wrote.

This is something Shale executives are calling for.

“I’m a bit puzzled that there wasn’t dialogue,” Devon Energy Corp. CEO Rick Muncrief said earlier this week in an interview in New York.

U.S. shale has been the subject of a litany of complaints from the Biden administration, from pipeline permits to leases, and is still producing less oil and gas than before COVID-19 hit a long time ago. two years, although the prices of both are much higher. Shareholder demand for high dividend and buyout prices is the main driver of their conservatism, but executives say a long-term U.S. government commitment to supporting fossil fuels could unlock more capital investment in the new production.

Liquefied natural gas is the order of the day. Europe gets 40% of its natural gas from Russia, and the urgency of no longer depending on Moscow to supply its network is growing day by day. The United States, which recently became the world’s largest LNG exporter, continues to help with nearly two-thirds of its cargo currently at sea bound for Europe, but more could be done to displace Russia long term, depending on the industry.

“As in World War II and other crises, America stands by Europe,” API CEO Mike Sommers said in a March 3 statement. Biden could “move faster” to approve LNG export terminals and stop blocking funding for gas infrastructure overseas. , he added.

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The administration has frequently pushed back on calls for help from the industry, arguing that it does not oppose increased oil and gas production. Companies can take advantage of the thousands of unused drilling permits they already have, White House National Economic Council Deputy Director Bharat Ramamurti told Bloomberg Television. “If people want to get down to business and produce more, they are free to do so.”

But that’s not exactly a ringing endorsement. And other more serious problems remain. A lease sale in the Gulf of Mexico was recently struck down in federal court, citing inadequate climate analysis; pipeline permits, especially in the northeast, are difficult; and the Securities and Exchange Commission is drafting regulations that would require public companies to disclose details of energy purchases and greenhouse gas emissions.

Privately, industry executives say the White House’s anti-fossil fuel agenda is making investors and banks less willing to fund drilling campaigns that will only pay off years into the future, increasing their cost of fuel. capital. Chevron Corp. CEO Mike Wirth said he hoped to have a better dialogue with the administration than when he first started.

Indeed, fears about energy security are growing rapidly. Oil could hit a record $185 a barrel by the end of the year if buyers continue to freeze Russian crude, JPMorgan analysts have warned. In Europe, natural gas futures prices are 10 times higher than they were a year ago. U.S. gasoline prices are at their highest since 2014 and hit a record high in California on March 3.

Once the administration has exhausted its initial efforts to rein in prices — namely, releasing oil from government inventories and pushing OPEC to increase production — politicians can finally turn to U.S. producers, Scott Gruber said. Citi Group Global Markets Inc. analyst, in a note.

One of the main advantages of shale is that it is one of the few sectors in the global oil industry that can ramp up production quickly, in months rather than years for large offshore projects.

Pioneer Natural Resources Co. CEO Scott Sheffield said the oil independent was ready to increase its production target as part of a “coordinated effort,” according to an interview with S&P Global Commodity Insights.

Independent U.S. shale producers were already on track for record profits this year, even before the recent surge in oil prices above $100 a barrel. Profits will reach $135 billion, a third more than last year and nearly double 2019 levels, according to Bloomberg Intelligence.

— Written by Kevin Crowley, Sergio Chapa and Jennifer A. Dlouhy

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