The era of “exponential” growth in the US oil and gas sector "is over" as companies focus on boosting shareholder returns, according to Jeff Miller, chief executive of US oilfield services company Halliburton.
“We'll see growing investment, but quite frankly, nothing even close to what we saw from 2008 to 2014,” said Mr Miller, who was speaking at an Adipec panel on Tuesday in Abu Dhabi.
A US shale resurgence, centered around the Permian Basin of Texas and New Mexico, turned the country into the world’s largest crude producer in 2018.
Shale producers, quick to scale up drilling in response to rising crude prices, have been reluctant to increase activity as they come under pressure from investors to boost profits and returns.
“Companies were spending at a rate of 120 per cent of their cash flow and that can’t go on indefinitely,” said Mr Miller.
The US will remain the leading source of medium-term non-Opec liquids supply growth, providing 3.9 million barrels per day of oil, according to the Opec World Oil Outlook.
However, US tight oil output will peak at just 16 million bpd in 2030 due to “resource constraints”, the report said.
The current energy crisis, sparked by Russia’s invasion of Ukraine, has been exacerbated by years of underinvestment in the industry's infrastructure worldwide.
Oil and gas upstream investment needs to increase and be sustained at near pre-Covid levels of $525 billion through 2030 to ensure market balance, according to the International Energy Forum.
Upstream investment last year was depressed for a second consecutive year at $341bn — nearly 25 per cent below 2019 levels.
“We got here due to eight years of meaningful underinvestment and now what we are seeing is a supply shortage, which [will] probably get resolved with probably eight years’ worth of investment,” said Mr Miller.
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Adipec 2022: day two — in pictures
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President Sheikh Mohamed greets an energy industry executive at the 2022 Abu Dhabi International Petroleum Exhibition and Conference at ADNEC. Hamad Al Kaabi / UAE Presidential Court -
Khaldoon Khalifa Al Mubarak, Abu Dhabi Executive Council member, chairman of the Executive Affairs Authority and managing director and group CEO of Mubadala Investment Company, left, with Sheikh Khaled bin Mohamed, member of the Abu Dhabi Executive Council and chairman of Abu Dhabi Executive Office. Mohamed Al Hammadi / UAE Presidential Court -
Day two of Adipec. Photo: Adipec -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
ADIPEC day 2. Victor Besa / The National -
Visitors at the Abu Dhabi International Petroleum Exhibition and Conference. Victor Besa / The National -
Visitors at the Abu Dhabi International Petroleum Exhibition and Conference. Victor Besa / The National -
Visitors at the Abu Dhabi International Petroleum Exhibition and Conference. Victor Besa / The National -
Eduard Rujis, Managing Director, BlackRock, during the strategic panel discussion, Investing to ensure energy security and accelerate the energy transition at Adipec 2022. Victor Besa / The National -
Strategic panel discussion, Investing to ensure energy security and accelerate the energy transition at Adipec 2022. Victor Besa / The National -
Akshay Kumar Singh, Managing Director & CEO, Petronet LNG Limited (PLL), during the strategic panel discussion, Gas and LNG: bridging to the future. Victor Besa / The National -
Tetsuhiro Hosono, Chairman & CEO, JOGMEC, during the strategic panel discussion, Gas and LNG: bridging to the future. Victor Besa / The National -
Thomas Gangl, CEO, Borealis, during the srategic panel discussion, The important role circular economy will play in the drive to decarbonise the economy at Adipec 2022. Victor Besa / The National -
Abdullah Al-Saadoon, CEO, Sipchem and Hazeem Sultan Al Suwaidi, CEO, Borouge, during the srategic panel discussion, The important role circular economy will play in the drive to decarbonise the economy at Adipec 2022. Victor Besa / The National -
Akshay Kumar Singh, Managing Director & CEO, Petronet LNG Limited (PLL), during the strategic panel discussion, Gas and LNG: bridging to the future. Victor Besa / The National -
Tayba Al Hashemi, CEO, ADNOC Sour Gas, during the strategic panel discussion, Delivering the energy needs of today while investing in the energy systems of tomorrow. Victor Besa / The National -
Ken Gilmartin, CEO, Wood, during the strategic panel discussion, Delivering the energy needs of today while investing in the energy systems of tomorrow. Victor Besa / The National
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Europe, which is facing an energy crisis due to dwindling Russian supplies of natural gas, is boosting imports of LNG, creating shortages in developing economies.
For the first time, the International Energy Agency said natural gas demand will plateau by 2030 as countries switch to renewable energy at a faster rate.
However, Mubadala Energy chief executive Mansoor Al Hamed said the fossil fuel will have a role to play for “decades to come”.
“Despite the price volatility, the demand for gas will continue to be strong,” said Mr Al Hamed, who was speaking at the same panel.
“In the medium term, this can be a bridge fuel to renewable [and] at the same time, a vital backup for power supply.”
