London: One of the pioneers of the shale oil industry warned of a “pretty dramatic” drop in US production growth as companies cut investment due to persistent low prices.
Mark Papa, who built EOG Resources Inc. into the biggest US shale producer as chief executive officer from 1999 to 2013, said the nation’s output growth will stop this month and production will be significantly lower by January compared with a year earlier.
“We are about to see a pretty dramatic decline in US production growth,” he said at the Oil and Money industry conference in London Tuesday.
Oil has slumped about 50 per cent in the past year amid a global oversupply, prompting oil companies to curb investment and cancel some projects. US crude production has fallen for seven of the past eight weeks and the number of oil drilling rigs active in the nation is the lowest in five years.
Papa, who joined private equity firm Riverstone Holding LLC earlier this year, said that $45 a barrel was too low to give an incentive to shale producers to invest in new production, while $75 a barrel was “about right.” Prices of $90 to $95 brought too much shale oil onto the market, he said.