Vienna — The chairman of Permian heavyweight Pioneer Natural Resources took theunusual step Wednesday of publicly asking OPEC to pump more oil, arguingthe price range of $60-$80/b is best for the group's members and Texasshale drillers alike.
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* Sheffield says oil rose to $80/b too fast, calls for $60-$80/b
* Texas bottleneck will shut in some Permian wells for a year
* Most of surging US production will continue to be exported
Scott Sheffield argued that global supply risks are looming in Iran,Venezuela, Libya and even the Permian Basin, where he said production growthwill stay flat from September 2018 to September 2019 as new pipelines arebuilt to alleviate a bottleneck.
"If OPEC doesn't do something, I think we'll see $100/b oil-plus,"Sheffield said at the OPEC International Seminar in Vienna. "$100 oil is notgoing to help OPEC, and it's not going to help us in West Texas. It will hurtdemand and remove investment."
OPEC meets Friday in Vienna to decide on the future of its 1.8 millionb/d production cut agreement with 10 non-OPEC partners, including Russia.Saudi Arabia and Russia appear aligned on raising quotas, but are facingopposition from Iran, Iraq and Venezuela.
"It's very important for OPEC to put more oil on the market," Sheffieldsaid.
Sheffield said major global supply risks include 500,000 b/d of lostIranian exports when US sanctions go back into force in November and 500,000b/d in further drops from Venezuela's collapsing oil industry.
"OPEC does a great job of trying to balance the market," he said in aninterview with S&P Global Platts on the sidelines of the conference. "So theyneed to balance the market. They need to not let it get out of hand.
"But if they add too much, too fast and it goes back to $40, they made amistake," he added.
Sheffield predicted US oil production will surge to 15 million b/d withina decade despite the current Permian bottleneck.
"We'll have hiccups, we'll have pipeline constraints, we'll have peopleconstraints, but I'm still very bullish on US supply growth," he said. "Itwill probably take six to seven years to get up to 15 million b/d." Sheffieldsaid most of the surging light sweet crude output would continue to beexported, as Gulf Coast refiners are geared toward heavy crudes.
Other highlights from the interview, which has been edited for clarity:
Q: How much should OPEC increase output?
A: I want enough over time. Venezuela is going to decline monthly. Iransanctions will occur on a monthly basis once [US sanctions] return inNovember. OPEC needs to come out with something that they're going tophase in as they see supply from Iran and Venezuela and Libya come offthe market.
Q: What does OPEC need to know about shale?
A: Before they make a decision, they need to understand the Permian isnot going to be able grow for 12 months. The Eagle Ford and the Bakkenare growing very little. They're back up a little bit, but US supply fora year is not going to [grow much] because of pipeline constraints.
Q: Has the White House helped US shale drillers?
A: Lifting the export ban was the biggest help we got about three yearsago from the Obama administration. That was the biggest event thathappened for our industry.
Q: Did US President Trump make it harder for Saudi Arabia to increaseproduction by tweeting that OPEC was to blame for high oil prices?
A: He knows there's a sweet spot. The price got too high, too fast, so Idon't blame him for making his comments.
--Edited by Jonathan Dart, email@example.com