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GSCW chat: Where are oil & gas prices and production headed in 2022?

FIRESIDE CHAT TOPIC: With U.S. oil and gas production on the rise once again, are levels going back to where they were a few years ago?

DETAILS: Ben Shattuck of WoodMac, one of the leading oil and gas research companies in the world, sits down with Kevin Hill of FreightWaves to discuss the state of the U.S. upstream sector. It has gone through huge volatility in recent years, with prices and production plunging at the start of the pandemic, only to find itself looking at $100 (per barrel)  oil and rebounding output. But is that rebound going to be enough to meet world demand?

SPEAKER: Shattuck is the research director of Americas Upstream Oil & Gas for WoodMac. His area of speciality is in hydrocarbon output in the Lower 48 of the U.S., and he has a particular focus on the Permian Basin, the heart of the rise in U.S. output in the past decade. 

KEY QUOTES FROM SHATTUCK:

“We think some of the fears in the oil market have driven prices higher than what you would expect from the fundamentals, so we would expect oil prices to trend downward.”

“Longer term the key question is, how will U.S. oil and and gas show up to meet the call for increasing demand? We are in a new world in terms of the business model, with companies paying down debt, reining in the spending and the rate of investment. “

“We’ve drilled some of the best rock and instead of reinvesting some 130% of operating cash flow, we’re doing 50%. You do those two factors on top of each other and you don’t end up with consecutive years of million-barrel growth.”

“I’ve been surprised in some ways to see the legacy U.S. oil and gas actors embrace a low-carbon future. I think the belief is that oil and gas will be in our energy mix for the foreseeable future, so the way they are thinking is about future-proofing the business model. The industry is looking for the best path to get to net zero.”