Ryan Lance, the chairman and CEO of ConocoPhillips, has pointed to the future of US shale oil production as being dependent on oil prices.
WTI crude oil has been trading in the low $60s recently, and Lance said production would stagnate at this level. Should that price drop into the $50s, he said we would likely see a decline in US shale production. This matches with the results of the Dallas Fed Energy Survey earlier this year, in which executives cited an average price of $65 for profitability.
Nevertheless, Lance said there was a scenario where US shale oil production could grow modestly, with WTI prices:
“…maybe in the 70s, or 65-75. We’ll still see continued modest growth out of the US…but we see plateauing production, probably at the end of this decade, coming out of the US, unless there’s going to be another technological breakthrough in our business. And don’t bet against our industry.”
The cost of producing oil from a shale well depends on a number of factors. These include the quality of the asset, and the technologies employed to maximise output from the well, as well as the costs associated with drilling, completion and operation.
ExxonMobil, the maker of the Mobil Pegasus gas engine oil, says it expects its breakeven price to drop to $35 per barrel by 2027 and $30 by 2030. This means it could, in theory, fund dividends and capital investment even with oil prices in the 30s.
